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The Philippine economy expanded 6.8 percent in the fourth quarter of last year, lifted by a strong performance from service industries, the government said Thursday.
It said the robust growth was led by household spending, helped by low inflation and remittances from millions of overseas workers.
Economists have credited renewed confidence in the Philippines on President Benigno Aquino III's push to reduce graft and improve governance following a succession of corrupt governments.
For all of 2012, the economy grew 6.6 percent.
Services rose 7.4 percent in 2012, industry was up 6.5 percent and agriculture rose 2.7 percent.
The economy grew a feeble 3.9 percent in 2011. It still faces challenges, including decrepit infrastructure, rampant poverty and unemployment and low foreign investment.
"Good governance generates confidence that translates to more economic activity," said Finance Secretary Cesar Purisima, who credits the growth to Aquino's anti-corruption reforms.
Purisima said for 2013, the government will focus on accelerating the implementation of projects, programs and policies put in place to ensure that growth momentum is sustained.
Socio-Economic Planning Secretary Arsenio Balisacan said the biggest challenge is to address the country's power problems to allow investments, manufacturing and exports to pick up and have a greater share in the growth that is now led by consumption.
He said the government is seriously addressing the country's energy requirements, with the aim of raising generation capacity, achieving reliable and adequate supplies and expanding rural utilities.
The Philippines has been dogged by an inadequate power supply due to a backlog in investments in expensive power infrastructure. It also has among the highest power rates in the region.
Balisacan said massive investments are also needed in the agriculture sector, including farm-to-market roads to improve connectivity, and greater access to credit for farmers.