Philippines recorded fastest growth in Asia in Q1

Workers transport crates containing bananas on a wooden cart at a food market in the mountain resort of Baguio city in northern Philippines. 

DAVAO, Philippines -- The Philippines has outpaced China to become Asia's fastest growing economy, as election spending helped push gross domestic product in the first quarter to a better-than-expected 6.9% expansion.


Growth in the January-March period marked the fastest annual quarterly growth in almost three years. Household spending, which generates more than two-thirds of the $300 billion Philippine economy, increased 7%. Investments also grew 23.8% on the year while government spending went up 9.9%.
"This robust performance of the economy increases the likelihood of achieving the official GDP growth projection of 6.8% to 7.8% for full-year 2016, despite the weak agriculture and fishery sector," Socioeconomic Planning Secretary Emmanuel Esguerra told a press conference in Manila.
The Philippine economy typically gets an added boost during election years, when key sectors such as manufacturing, services, transport and communications benefit from campaign-related spending. Historically, Esguerra said election spending adds 0.3 to 0.4 percentage points to GDP.
Net profit of Cebu Air, which operates budget airline Cebu Pacific, surged 81% to 4 billion pesos ($85 million) in the first quarter of 2016 from a year ago. Passenger volume also increased 13% year-on-year in the period to 4.8 million.
Election laws put a cap on spending for candidates, but analysts say the legal limit is usually breached. A political strategist estimated that a presidential candidate needed up to 5 billion pesos to run a campaign, way higher than the 560 million pesos ceiling imposed by law.
"Growth in the second quarter of an election year is usually stronger than in the first quarter," Esguerra said.
The Philippines' first-quarter GDP growth outpaced that of China's at 6.7%, Vietnam's at 5.46%, Indonesia's at 4.92% and Malaysia's at 4.2%.
Despite the positive news, risks still cloud the Philippine economic outlook as the effects of El Nino continue to take its toll on the agriculture sector, which declined 4.4% on the year in the first three months of 2016.
The upward momentum of the Philippine economy comes at a critical transition in the nation's political leadership. President Benigno Aquino, who turned what was once Asia's "sick man" to the region's "bright spot," will step down next month.