Philippines: GDP figures surprised to the upside – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting comment on the latest results from the GDP readings in the Philippines.

Key Takeaways

“The Philippines’ economy expanded at a stronger-than-expected pace of 7.2% y/y in 4Q22 (vs UOB est: +6.5%, Bloomberg est: +6.6%) but on trend wise, the growth rate decelerated from 7.6% in the preceding quarter and the previous peak of 8.2% in 1Q22. The full-year real GDP growth also came in higher than anticipated at 7.6% in 2022 (UOB est: 7.4%, Bloomberg est: 7.4%, 2021: +5.7%), marking the strongest annual growth since 1976.”

“Almost all economic sectors pencilled in positive growth in 4Q22, except for the agriculture, hunting, fishery & forestry industry. Resilient household consumption, higher government spending, sustained investments and stronger exports amid slower imports also helped to support the growth momentum last quarter and fully cushioned the drag from stock withdrawal activities.”

“We expect real GDP to moderate further throughout 2023, taking the full-year economic growth rate down to 5.0% (official est: 6.0%-7.0%) from a 46-year high of 7.6% in 2022. Our view mainly takes into consideration statistical base effects and prevailing downside risks to the growth outlook. Although the nation’s economic growth is expected to extend its downtrend, inflation risks are still tilted to the upside, suggesting that interest rate will have to rise further to reach levels sufficiently restrictive for some time. Thus, we stick to our BSP call for two more 25bps hikes in 1Q23 before taking a pause at 6.00% thereafter.”