Thread by @Trinhnomics

The Philippines has its Q3 GDP out in 20mins & expectations of a bounce to 6% from 5.5%. So far this yr, growth has been underwhelming as the Build, Build, Build push by President Duterte loses momentum. Note that the Philippines is mostly domestically driven as exports stagnate

To be fair, the Philippines export is both services & merchandise so if you add the two up then it is much better. That said, it can be more outwardly driven & do more to capture this push for diversification by investors, esp FDI investors. The country has plenty of potential👈🏻

The rate cuts so far have lowered funding costs (look at the local currency curve being pushed down by both RRR cuts & policy cuts). Beyond monetary policy, the Philippines really needs to work on its soft & hard infrastructure to be more competitive esp via tradeable sectors🇵🇭👇🏻

Let's look at Vietnam sovereign curve, which has been trending downward for years now despite higher growth. Innteresting b/c it means that liquidity still more ample in the system despite higher growth, an unusual sign for a frontier market. Explained 👇🏻

https://twitter.com/Trinhnomics/status/1186894941181501440?s=20

Vietnam is likely to have the best GDP in Asia this year - Q3 GDP was 7.3% vs 6.7% in Q2. With China likely to grow around 6% & India not much better (2 giants of Asia) & the rest of ASEAN around ~5% level (Indonesia, Malaysia, etc), Vietnam is the only one to punch ~7% level👈🏻

The Philippines grew %6.2 YoY from 5.5% in Q2 2019, which is a bounce from Q2 but still a deceleration for the year. The rate cuts so far have been helpful (see funding costs falling above). Growth is primarily service driven as it bounced 6.9% while agri & industrial less strong

Let's recap Q3 2019 growth rates so far (%YoY):

Vietnam 🇻🇳 +7.3
The Philippines 🇵🇭 +6.2
China 🇨🇳+6
Indonesia 🇮🇩5
Taiwan 🇹🇼2.9
South Korea 🇰🇷+2%
USA 🇺🇸+2%
EU 🇪🇺+1.1%
Singapore 🇸🇬+0.1%
Hong Kong 🇭🇰-2.9%

Let's look at the expenditure breakdown of the Philippines GDP:

As usual, the strength of consumption is off the chart! Gov+ household spending accelerated 👏🏻

Investment is CONTRACTING (again) & worrying durable equipment is falling

Merchandise trade meh but services good👏🏻👇🏻