MANILA, Aug. 29 (Xinhua) -- The Philippines' gross domestic product grew 7.5 percent on year in the second quarter, beating market forecasts and affirming the country's position as the fastest growing economy in the Southeast Asian region.
This also boosted the 2013 first semester growth to 7.6 percent from 6.4 percent in the first half of 2012.
Socioeconomic Planning Secretary Arsenio Balisacan said in Thursday's briefing that the Philippines' second quarter growth surpassed the growth rates of other ASEAN countries including Indonesia (5.8 percent); Vietnam (5 percent) and Singapore (3.8 percent).
This was the fourth consecutive quarter that the GDP rose beyond 7 percent. Balisacan said this validated the fact that the Philippine economy "is now on a higher growth trajectory."
Analysts concur with this observation, noting that given the strong growth registered in the first half, the economy is on track to achieve the targeted 7 to 8 percent growth for the year.
Victor Abola, associate professor of economics at the University of Asia and the Pacific, said the local economy can sustain to grow by more than 7 percent in succeeding months.
"The government will be able to continue to spend on infrastructure aggressively and exports should have a mild recovery in the second half," Abola said in an interview with Xinhua.
"The strong man of Asia remains strong," Eugenia Fabon Victorino, ANZ Bank analyst, said in her report.
"We maintain our 2013 GDP growth forecast of 7.1 percent. Sources of growth are now more balanced. We continue to expect domestic growth to be underpinned by public and private investment, " she said.
Domestic and government spending continue to underpin the economy, with private consumption growing 6.2 percent. This was mostly due to steady inflow of remittances from Filipinos working abroad and continued rise in employment provided by the business process outsourcing companies.
The second quarter's performance also underscores the growing role of private investments in shaping the country's growth.
Balisacan said the economy is "in the process of rebalancing, moving from being largely consumption-driven to becoming investment-led and industrialized, with the ability to provide higher quality jobs for Filipinos."
He said capital formation was growing faster than household consumption in the past three months, while the industry sector was outpacing the growth of the services sector.
Investments in fixed capital formation in the second quarter increased to 9.7 percent from 8.7 percent of the same period last year.
Bad weather weighed on the agriculture sector, tempering overall economic growth. But the double-digit growth rates in fixed capital and the manufacturing subsector in the last quarter compensated for the losses incurred from the farm sector.
The industry sector grew by more than 10 percent in the last two quarters on back of the strong performance of manufacturing firms. Balisacan welcomed this development as manufacturing growth indicated greater use of skilled labor hence helping reduce the unemployment incidence in the country.
The service sector, which include the booming outsourcing industry, has been growing steadily over the past few years. But analysts said while it employed thousands of Filipinos, it failed to solve the prevailing problem of joblessness in the country.
"In the past, growth was driven largely by the service sector that had only been able to provide mostly low-paying, unstable, intermittent, and low-productivity jobs predominantly in the informal sector," Balisacan said.
Balisacan is hopeful that the rebound in the industry sector will provide more stable, productive and remunerative jobs even for the less-skilled workers.
"There is so much potential that the Philippine economy can realize, with vast opportunities and room for growth ahead of us. We are only at the early stages of our growth momentum, and it is encouraging to know that signs are pointing toward attaining sustained and inclusive growth for all," he said.
ANZ analyst Eugenia Fabon Victorino said the government now has more room to support growth in the medium term by investing more in infrastructure.
"After receiving investment grade rating upgrades from two of the three major rating agencies earlier this year, we believe the government should now address the infrastructure bottlenecks in the country and further increase public investment," she said.
Victorino forecasts private investment to remain robust thanks to high business confidence and strong credit growth.