Consumer spending growth to rise – BMI
CONSUMER spending growth will likely pick up this year and remain stable over the near term with the economy expected to strengthen, a Fitch Group unit said.
“We hold a positive outlook for consumer spending in the Philippines over 2024, as the economic recovery feeds through … over the year,” BMI Country Risk and Industry Research said in a report on Thursday.
“Household spending growth will be more positive, relative to 2023, as economic growth persists and consumption levels normalize,” it added.
BMI predicted 6.3-percent year-onyear growth in household spending to P12.8 trillion.
While inflation and high interest rates will remain a factor, spending will be supported by wage increases and increased purchasing power, it added.
The spending growth forecast is aligned with expectations that the Philippine economy will expand by 6.2 percent this year, improving from last year’s 5.6 percent. BMI expects the rate to hit 6.6 percent in 2025.
While consumer confidence remains negative with pessimists outnumbering optimists, the trend has improved from lows seen during the Covid-19 pandemic, BMI also noted, adding that the spending forecasts will be revised if the confidence indicator changes.
Inflation, meanwhile, is expected to fall within the 2.0- to 4.0-percent target at 3.9 percent this year and 3.3 percent in 2025, while unemployment will remain at 6.3 percent.
“Easing inflationary pressures and a solid labor market will form the base for stable consumer spending,” BMI said.
“Risks to this outlook would be an overreliance of remittances which will fluctuate from external market conditions beyond consumers’ control and more aggressive economic weakness, which will weigh heavier on household purchasing power,” it added.
A key concern for this year will be heightened geopolitical and economic risks that could quickly affect the economy, particularly sticky food, beverage, and housing and utilities inflation; a plunge in property and share prices; higher-for-longer interest rates; an uptick in unemployment; the impact from the Russia-Ukraine and Israel-Hamas wars; and wider tensions in the Middle East and North Africa.