THE PHILIPPINE ECONOMY WILL GROW 5 PERcent this year, driven by a rebound in the first half due to election spending and the ?lagged effects of a still loose? monetary policy, according to a Swiss investment research firm.

Edward Teather, an economist with UBS Securities, said in a report released Friday that current monetary policy was expected to push a significant recovery in credit.

?A recovery from the weakness induced by last year?s devastating storms should also help lift activity,? Teather added.

UBS? forecasts are far higher than the government?s projected range of 2.6 to 3.6 percent as well as market analysts? consensus of 3.8 percent.

?We believe the rebuilding effort following the storms should spur activity growth in the first half of 2010,? Teather said, referring to the damage inflicted by weather disturbances ?Ondoy? and Pepeng.?

?Non-government election related spending by candidates ahead of the May 2010 elections should also boost activity,? he said.

The National Economic and Development Authority, based on a study of the 2007 elections, estimates that candidates? spending pushes domestic output growth by 0.34-percentage point

Teather said that without a boost from election spending, and the economy increases as it has in the past 10 years, growth in 2010 would settle at 4.3 percent.

Also, Teather said global demand indicators remained supportive of remittances and a near-term recovery in export and manufacturing.

These will, in turn, further drive up consumer spending, which grew 5.1 percent year-on-year in the fourth quarter of 2009, and boost investment, which dropped 1.6 percent.