Macroeconomic Forecast Philippines

Economic activity unexpectedly accelerated in Q407 from the previous quarter, as higher levels of government spending and lower interest rates boosted domestic demand. Fourth quarter GDP growth surprised on the upside at 7.4% y-o-y, increasing from the previous quarter's 6.6% expansion, taking the full-year figure for 2007 to 7.3% - a 31-year high. This robust growth momentum should be carried forward into H108, but while domestic demand should remain supportive over the remainder of the year, a weaker external environment and a stronger currency will likely weigh on the economy going forward.

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