US bond yields soared and the dollar strengthened as the Q4 Gross Domestic Product (GDP) indicated that the US economy grew at a faster pace of 2.9% versus a 2.6% consensus estimate in that period. This supports the case for the US Federal Reserve (the Fed) to remain hawkish.
However, the latest US GDP print was lower than the 3.2% gain of Q3, renewing concerns of a recession this year. Personal consumption expenditures growth, which accounts for about 68% of US GDP, slowed to 2.1% year-on-year from 2.3% in the prior quarter.
While strong economic performance is usually a good thing, in this case it can provide a reason for the Fed to keep raising the interest rate. That’s because of the current inflation rate in the US.
The Philippines’ GDP grew by 7.2% in the fourth quarter, beating the estimate of 6.6%. This put the full 2022 growth at 7.6%, which is the country’s best annual performance since 1976. NEDA Secretary Arsenio Balisacan said that the government is likely to keep its 6%-7% GDP growth forecast this year.
GDP gives information on how large and economy is and how it’s doing. When GDP is high, this is a promising indicator of economic health.
The Philippines’ trade deficit widened in December which brought the full year 2022 trade balance to a $58.32-billion deficit due to weaker global markets, volatile foreign exchange, higher oil prices and global inflationary pressures.
A trade deficit is what happens when a country imports more than it exports in a certain period. This isn’t automatically a bad thing, as there are benefits (such as satisfying demand that is higher than local production) during a trade deficit.
It can also happen when the country experiences a high volume of foreign investments.
The mixed signals of the latest news make it hard to see where the situation is headed. Avoiding large changes to your portfolio might be your best move for now.