MANILA – The Philippine household spending is poised to expand by over 6 percent in the coming year as the nation's economy continues on its path to recovery and consumer activity approaches pre-pandemic levels.
According to Philippines News Agency, a report released Monday by the Fitch Group subsidiary forecasts a 6.3 percent year-on-year increase in household spending for 2024, translating to an estimated PHP12.8 trillion in real terms. BMI expresses confidence in the Philippine consumer market's growth prospects, correlating this positive trend with an anticipated 6.2 percent economic growth for the country in the next year.
The report acknowledges the current sluggish consumer confidence but notes a significant uptick, attributed to improved labor market conditions, higher incomes, and increased remittances. BMI plans to monitor the consumer confidence indicators closely and adjust their projections as necessary.
While high inflation poses a potential risk to consumer spending, BMI observes that the gradual easing of inflation is likely to bolster expenditure. The report highlights the persistent high inflation rate, which stood at 6.1 percent as of September this year, marking the highest point since May 2023 and one of the steepest since the 2008 financial crisis.
Despite this, BMI anticipates a decrease in headline inflation to 4 percent in 2024 from the current 6.1 percent, a change expected to favorably impact Filipino consumer prospects. The report concludes that while easing inflation and stable employment provide a solid foundation for continued consumer spending, risks such as higher-than-expected inflation or intensified economic downturns could negatively impact household purchasing power.