Some good news

In the past months, investors have been confronted with a spate of bad news that weighed on market performance. Locally, we saw the country’s disappointing GDP growth in the second quarter of the year, which came on the back of high inflation and the contraction in government spending.

On the global front, we witnessed the wars in Israel and Ukraine that led to oil price spikes that fanned inflation. Central banks responded with rate hikes, even as a global economic slowdown and a possible recession loomed. The US dollar strengthened as most currencies weakened. China’s economy slowed as its cold war with the US continued. Amid all the negative developments, investors received a welcome respite with the slew of much-needed good news that lifted financial markets.

One of the more important good news came with the release of the country’s third quarter GDP report. GDP growth quickened to 5.9 percent in the third quarter from 4.3 percent in the second quarter. This came above the consensus estimate of 4.7 percent. This was driven by the 6.7 percent growth in government spending which recovered from a 7.1 percent contraction in the previous quarter. This can be attributed to the call of the economic team on government agencies to implement catch-up plans in order to address underspending. Meanwhile, consumption growth remained strong at five percent.

Another important positive development is the easing of domestic inflation. Average inflation in the third quarter settled at 5.4 percent, lower than the six percent in the second quarter and 6.5 percent in the third quarter last year.

On a monthly basis, headline inflation dropped to 4.9 percent in October from 6.1 percent in September, falling below the central bank’s monthly forecast range of 5.1 to 5.9 percent. This can be traced lower to food inflation at 7.1 percent in October from 10 percent in September. Though rice, sugar, and vegetable prices remained high, their inflation rates have moderated.

In its policy statement, the Bangko Sentral ng Pilipinas (BSP) said that it stands ready to undertake further actions to prevent supply-side pressures from leading to second-round effects.

Despite the strength of the US