Q4 GDP growth comes in at 5.6%

The Philippine Statistics Authority (PSA) [link] revealed yesterday that the Philippine economy grew 5.6% y/y in Q4, which is down from the 6.0% it grew in Q3. The mild result also caused the full-year GDP growth figure to fall to 5.6%, which is well below the government’s own target for FY23 of 6% to 7% growth, and miles behind the 7.6% full-year GDP growth that the PH posted in FY22. According to the PSA, the industries that were most influential in our FY23 growth were wholesale and retail trade, vehicle repairs, financial and insurance activities, and construction.

MB bottom-line: As I mentioned yesterday, I’m less concerned with the number itself as I am with the reactions to the number. Nicholas Mapa of ING [link] thinks that the “BSP is likely done with hiking” thanks to this “GDP slowdown”. Juan Paolo Colet of China Bank Capital [CHIB 31.60, up 0.2%] [link] put a positive spin on the results, saying that the Q4 number came in above consensus estimates and that our performance was actually better than most peers in the ASEAN region. Generally, while most commentators note the full-year underperformance to target, the tone is one of guarded optimism. I got a sense of, “If we’re one of the top growing ASEAN economies with high rates, imagine what we could do when they start to come down!” But that’s sort of the problem that I was talking about yesterday. Everyone talks about how rates will come down in the second half of the year, but the milestones that we need to achieve for that to happen are not very clear. I’m not doubting that rates will come down. I’m just starting to grow concerned that we’re counting our low-rate chickens before they’ve hatched. The BSP is anticipating January’s inflation to be around 2.8% y/y, which would be the first time it has been below 3% since the early days of the pandemic. Just wait and see.

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