Due to strong domestic consumption and increased government spending, the Philippines dislodged China from being number one in Asia in terms of economic growth for the first quarter of 2013.

The remarkable growth pace that surpassed economists' expectations has consequently pulled the Philippine peso up from a recorded 11-month low, and strengthened assumptions that the country's central bank would keep its policy rate in status quo throughout the year.

The growth is seen by many as being bolstered by the investment grade promotion recently given by Standard & Poors, which is the second debt watcher to upgrade the Philippine long-term foreign currency issuer rating by one notch, from BB+ to BBB. That promotion is seen to lower borrowing costs and aid in attracting foreign investment into an economy beset by high unemployment and poverty ratio.

Philippines' first quarter GDP increased by 2.2 percent over the first three months of 2013, considered a remarkable rise compared to the same period last year. A group of economists at Reuters had earlier issued a 1.6 percent growth forecast.

Compared to 2012, the economy posted a 7.8 percent growth, an increase mainly fuelled by strong domestic spending. This growth has made the Philippines the fastest growing economy in Asia, surpassing China's annual pace of 7.7 percent, with a quarterly growth of 1.6 percent.

The Philippines also exceeded the 6.1 growth forecast by a Reuters poll in terms of the country's year-on-year GDP. This was the fastest growth rate since the second quarter of 2010 which saw the country's economy being boosted by local spending due to national elections.

"We may now be moving along a new growth trajectory," Philippine economic planning chief Arsenio Balisacan said.

Capital investment spiked 47.7 in the first three months of the year with the private sector moving to expand capacity to address a robust domestic consumption. Public construction also jumped 45.6 percent as a more efficient budget dispensation and better fiscal standing gave way for the building and rehabilitation of school buildings, roads and bridges.

The per capita GDP increased 6.1 percent for the first quarter which is the highest at least since 2010.

Analyst Bernard Aw of the Forecastweb in Singapore said that the "Philippines' improved risk and debt profile would help shield the (Philippine) peso from external vagaries."

Relying heavily on its exports capacity, the Philippines was feared to face some amount of risk as recovery in global growth is said to be losing its momentum.

The manufacturing sector, however, showed little signs of being affected as data showed an annual growth of 9.7 percent in the first quarter, with demands for "food items, household appliances, chemicals, communication, transport and machinery equipment."