The economy grew by 5.4 per cent in 2006.

The government attributed the increase to 'positive growth' in all sectors of the economy, led by services and industries.

Gross national product (GNP), which takes into account net foreign remittances from abroad, rose to 7.8 per cent in 2007 from 6.1 per cent in the previous year, the government said.

The economy was led by the robust services sector where output grew 8.7 per cent. Industrial output increased 6.6 per cent, while farm production rose 5.1 per cent.

In last three months of 2007, the economy grew 7.4 per cent year-on-year, the government said.

'I think this was more or less discounted by the market. But even so, it was slightly higher than what most people had expected,' Astro del Castillo, director of the Association of Securities Analysts of the Philippines, said.

'What we are worried about now is moving forward. The fact that we performed well in 2007 is good news but 2008 might be a different story given the challenges we are facing,' he said.

He said the Philippine economy should continue to grow this year but will be slower than 2007 due to the threat of a recession in the United States - the Philippines major trading partner.

'The government should continue to sustain its fiscal reforms,' he said. -- AFP