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According to Fitch Ratings’ research division, household expenditure in the Philippines is expected to increase by 5.5 percent this year, which is less than the 8.2 percent growth anticipated in 2022.

According to Fitch Solutions’ research, which was published on Tuesday, household income growth will underpin consumer spending in 2023, enabling Filipino consumers to spend despite the high inflation rates.

“In 2023, we anticipate that household income growth will outstrip consumer price inflation. This will guarantee real income growth and increase the likelihood of consumer spending, according to Fitch Solutions.

According to the analysis, the prediction for consumer expenditure is in line with the predicted slowdown in Philippine economic growth from 7.4 percent in 2022 to 5.9 percent this year.

“The growth slowed down as anticipated, but the pace of the decrease was less rapid than anticipated. Further deceleration would occur during the projection period as a result of high energy prices and restrictive monetary policy, it warned.

From 2024 to 2027, consumer spending was expected to grow by an average of 5.1 percent each year, according to an estimate by Fitch Solutions.

As a result of the epidemic, consumer confidence has been low since 2020, but it has recently begun to increase.

After reaching a peak of -54.5 in the third quarter of 2020, the consumer confidence index stood at -14.6 in the fourth quarter of 2022.

According to Fitch Solutions, “consumer confidence has increased in step with the economic recovery from the pandemic’s consequences.”

Work and household income

According to the study team, the country’s robust labor market was a key factor in the expansion of consumer spending last year and is predicted to do so again this year.

“Many markets have reported noticeably robust labor markets following COVID (coronavirus disease 2019), powered by quick local and global economic recoveries. Additionally, governments have supported local labor markets greatly, creating extremely tight markets that have raised nominal salaries, according to Fitch Solutions.

Fitch Solutions predicted that the unemployment rate would reach 5.4 percent for the entire year of 2023.

“Many households in the Philippines rely heavily on remittances, and there is an increasing need for Filipino labor around the world. Particularly in the fields of construction, cleaning, and medical and health services, there is a need for Filipino labor, according to the research.

However, it listed a number of potential threats to this revenue during the coming year, most of which are connected to global inflationary pressures.

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