Philippine Markets Newsletter

PH Monday Macro: 2022 was a tough year for the economy and consumers, though 2023 could turn out to be a better year

January 16, 2023

While technically, the whole world is still in a pandemic, and people have been moving around as if everything is back to our pre-pandemic days, voluntary mask-wearing aside.

Being able to travel more easily and operate businesses at maximum capacity should have pushed the economy higher, but high costs continue to weigh down on investor and consumer sentiment.

Philippine Markets Newsletter:
The Monday Macro Report
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2022 was a rollercoaster ride for many investors in the Philippines, with October 2022 being a particularly bad month.

For one, the Philippine peso depreciated to all-time lows, hitting nearly PHP 60 to USD 1. The Inflation rate jumped from 6.9% in September to 7.7% in October. The PSEi (Philippine Stock Exchange index) fell to 5,700 levels from its 7,000 levels at the start of the year in anticipation of tougher times ahead.

Although, before the year ended, the economy started bouncing back, as the market did as well. Consumer spending showed gradual improvement throughout 2022, with the easing of travel restrictions and with establishments now allowed to operate at 100% capacity. The central bank continued increasing interest rates to manage inflation, ending the year at 5.5%, a 14-year high.

However, expectations for strong growth in 2023 remain tempered, with high prices of goods still a concern for consumers, businesses, and investors.

The Consumer Confidence Index (CI) is computed as the percentage of households that answered in the affirmative less the percentage of households that answered in the negative with respect to their views on a given indicator. The overall consumer CI measures the average direction of change in three indicators: the economy’s overall condition, household finances, and household income.

Consumer CI is a leading indicator of market movements because it is a general signal of consumer demand based on their perception of the current business and employment conditions and their expectations for these conditions for the next six months. Movements in consumer confidence will also signal credit expansion, as demand for credit increases with consumer demand.

Consumer confidence weakened to -14.6% in Q4 2022, with pessimism attributable to three major reasons: 1. faster increase in household expenses; 2. low income; and 3. fewer available jobs and family members who are working.

As such, even with more households being pessimistic about the future, consumer spending is expected to increase in Q1 2023, which could be an effect of the rising costs of goods.

That said, consumer sentiment on big-ticket items is expected to decline going forward, starting with Q4 2022. This means consumers are less likely to purchase motor vehicles, houses, and lots in the next 12 months or so.

Interestingly, even with the higher cost of goods and low income, more households reported having saved money in Q4 2022 versus the previous quarter. This is an important indicator to monitor as it will offer insights into consumer behavior in the next few months.

About the Philippine Markets Newsletter
“The Monday Macro Report”

When just about anyone can post just about anything online, it gets increasingly difficult for an individual investor to sift through the plethora of information available.

Investors need a tool that will help them cut through any biased or misleading information and dive straight into reliable and useful data.

Every Monday, we publish an interesting chart on the Philippine economy and stock market. We highlight data that investors would normally look at, but through the lens of Uniform Accounting, a powerful tool that gets investors closer to understanding the economic reality of firms.

Understanding what kind of market we are in, what leading indicators we should be looking at, and what market expectations are will make investing a less monumental task than finding a needle in a haystack.

Hope you’ve found this week’s macro chart interesting and insightful.


Stay tuned for next week’s Monday Macro report!



Angelica Lim
Research Director
Philippine Markets Newsletter
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