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Asia seizes the initiative in drive towards global recovery

The Philippine and Taiwan economies have grown more than forecast while Singapore's jobless rate is at a five-year low, in further signs of Asia's role leading a global recovery.

The Philippine and Taiwan economies grew more than forecast in the last quarter, and Singapore's jobless rate fell to a five-year low, signalling an upswing at the end of last year that underscores Asia's role leading a global recovery.

In the Philippines, GDP grew 6.8 per cent from a year earlier, while Taiwan reported a preliminary 3.42 per cent gain and upgraded its full-year growth forecast. Singapore's unemployment rate was 1.8 per cent.

Asia's resurgence as China rebounds contrasts with the United States last month reporting an unexpected decline in GDP after defence spending plunged. Meanwhile, Japan's economic outlook depends on Shinzo Abe, the prime minister, reviving wages and spending, with less than forecast industrial output for December highlighting the challenge ahead.

"Asia is leading the global recovery," said Glenn Levine, an economist at Moody's Analytics in Sydney.

"China has started to gather momentum as the various domestic stimulus policies kick in and that lifts the region. South East Asia is doing very well autonomously."

Taiwan raised its forecast for this year's growth to 3.53 per cent from 3.15 per cent as China's economic rebound boosted its imports, underscoring the president Ma Ying-jeou's case for closer trade and investment ties.

The island plans to allow more visitors and securities investment from the mainland, and let domestic lenders conduct business in yuan early this month.

Taiwan's shipments to China, its largest trading partner, rose 12.6 per cent in December from a year ago, an earlier report showed, and Taiwan Semiconductor Manufacturing, the world's largest contract producer of chips, has forecast first-quarter sales surpassing estimates as demand outstrips expectations.

"China's economy has bottomed out and it was the key driver for Taiwan's growth in the fourth quarter, as exports recovered," said Ma Tieying, an economist at DBS Group Holdings in Singapore.

"The recent measures will also contribute to growth in Taiwan's services sector this year," said Mr Ma, whose GDP forecast for this year the island is 4.2 per cent.

Taiwan's central bank held the discount rate on 10-day loans to banks at 1.875 per cent in December after inflation eased from a four-year peak in August. The economy grew 1.25 per cent last year, the statistics bureau said on Thursday.

Exports growth may be 6.07 per cent, more than a previous prediction of 5.11 per cent it said, and raised its inflation forecast for this year to 1.31 per cent from 1.27 per cent, with pressure expected from higher minimum wages and a planned electricity tariff increase.

"Taiwan is a nice barometer for the region and indeed for the global economy, given they are such an export-manufacturing led economy," said Mr Levine. "The fact that the fourth-quarter number was above expectations and showed a sharp acceleration does bode well for the region."

Elsewhere in the Asia-Pacific region, Japan's industrial production rose less than estimated in December from the previous month. New Zealand's central bank left its benchmark interest rate at a record-low 2.5 per cent while signalling concern about rising house prices.

In Singapore, the seasonally adjusted jobless rate fell to 1.8 per cent last quarter from 1.9 per cent in the previous three-month period as companies hired more local workers after the government tightened the inflow of foreign labour.

The Philippine president Benigno Aquino's efforts in transforming the nation into one of the region's fastest-growing economies have led to Google opening an office last month and Ayala Land unveiling plans to build more hotels.

Standard & Poor's in December raised the country's sovereign rating outlook to positive, citing improved governance and public finances, and taking it closer to an investment grade.

The Philippine peso has risen about 6 per cent in the past 12 months, the best performer among 25 emerging-market currencies tracked by Bloomberg. The Philippine Stock Exchange Index climbed to a record in December.

Amando Tetangco, the central bank governor said he was studying more measures to counter excessive capital inflows lured by growth, joining South Korea and Singapore in warning that policymakers need to consider more steps to reduce the impact of such funds.

The nation's fiscal situation is well under control, with the budget deficit within target, Cesar Purisima, the finance secretary, said on Thursday.

Bangko Sentral ng Pilipinas refrained from cutting its benchmark rate in December after four cuts last year and as capital inflows boost the peso.

The monetary authority targets inflation to average 3 per cent to 5 per cent until next year

* Bloomberg News

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