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PHL’s 4Q 2023 GDP beats estimates
The Philippine Statistics Authority reported that the Philippine economy grew by 5.6% in the fourth quarter, beating the median estimate of 5.2%. This brings full-year GDP growth to 5.6%, smack in the middle of our forecasted range of 5.5-5.7% growth. Despite beating consensus estimates, it seems that the BSP’s monetary tightening has begun to take its toll as this represents the weakest (non-pandemic) Q4 growth since the 5.4% growth recorded in 2013.
Consumption picked up, but remained weak
Growth in household final consumption expenditure (HFCE) picked up to 5.3% in Q4 from Q3’s 5.1%, snapping a seven-quarter deceleration trend. However, this is also the weakest Q4 HFCE growth since the 5.1% growth recorded in 2010. This was despite easing inflation during the period, which should have improved consumer confidence.
Capital formation picked up the slack as government spending slows again
Gross capital formation increased by 11.2% year-on-year (YoY) during the quarter, following flat growth rates of 0.3% in Q2 and -1.4% in Q3. This helped offset the 1.8% YoY decline in government spending for the quarter.
A Goldilocks report
We view the latest GDP report as sufficiently weak to keep the central bank hawks at bay, but not too weak as to cause alarm. We note that while the Philippines has come far in terms of recovery from the damage caused by the pandemic, we are not quite back to the previous growth trajectory.
Household consumption and capital formation still has some ways to go, and we are hoping that this would improve this year as the BSP’s monetary policy starts to loosen.
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