Stock market analysts cheered the higher-than expected Philippine economic growth in the third quarter, attributing it to the Marcos government’s decision to ease Covid restrictions which resulted in higher consumer spending and a more active economy.

“Growth was able to outperform the previous quarter despite elevated commodity prices and potential damage brought about by the rainy season,” said Regina Capital Development Corporation Managing Director Luis Limlingan.

Philstocks Financial Research Manager Japhet Tantiangco said that, “Compared to the previous quarter, the third quarter has posted a faster economic growth at 7.6 percent.”

“Overall, the fast growth we saw can be attributed to the current state of the economy which is more open compared to the same period last year. With restrictions eased, we had a more robust flow of consumer and business activities, better confidence towards the economy, and progresses in the labor market, all of which contributed to the strong growth,” he noted.

Rizal Commercial Banking Corporation chief economist Michael Ricafort said re-opening the economy and easing restrictions "mathematically magnifies any incremental growth such as the further pick up in both local and foreign tourism, resumption of face-to-face/in person classes, continued growth in foreign direct investments, OFW remittances, BPO revenues, exports, among others."

Abacus Securities Corporation said third quarter GDP growth of 7.6 percent came in far stronger than consensus of 6.2 percent.

“In the end, consumers held up better than we expected despite the jump in inflation (revenge spending is not dead) and there was a big surprise in capital formation (investments) which expanded by more than 20 percent,” it noted.

The brokerage added though that “Still, our outlook is for growth to sharply moderate over the next few quarters starting in the fourth quarter. Several consumer firms that have already reported earnings indicate that inflation is already driving consumers to trade down or look/buy cheaper alternatives.”

“The low base effect will also be quite diminished in the fourth quarter and there will tougher comparisons for 2023. Maybe this is why the market fell (yesterday) despite the better than expected GDP,” Abacus said.

Tantaingco also said “Sustaining the growth momentum could be difficult given the downside risks that we are currently facing. The rising inflation which erodes purchasing power and the rising interest rates which makes borrowing harder may weigh on consumption.”

“At the same time, the rising inflation which causes more of disposable incomes to be directed to consumption and the rising interest rates may also weigh on our investments,” he added.

Tantiangco also noted that, “Government expenditure is still expected to be tempered as the government works on fiscal consolidation. Finally, our exports could remain challenged due to the ongoing economic problems abroad, while imports could strengthen further due to growing intermediate goods requirements and dependency on offshore agricultural commodities. This in turn could widen our balance of trade deficit.”