Results of the latest quarterly consumer pulse study by private credit reference agency TransUnion show that Filipinos are optimistic of their financial situations changing for the better amid the continued economic upturn.
TransUnion said that with improved consumer sentiment, Gen Z Filipinos were the demographic with the biggest increase in in-store and online purchases as well as plans to increase non-essential spending. Younger Filipinos also led an increased understanding in the importance of credit monitoring, with report accuracy the top factor for doing so amid the lingering threat of fraudulent schemes targeting consumers.
TransUnion said despite the economic recovery observed in 2022 and a continued expansion of the gross domestic product to 6.4 percent in first quarter of 2023, household finances did not keep pace.
The percentage of respondents reporting worse than planned household financial situations increased to 27 percent in the second quarter from 25 percent in the first quarter. Respondents who were earning higher income in the past three months decreased from 45 percent in Q1 to 41 percent in Q2.
It said even with slightly worse household finances reported among respondents, an improving economy buoyed consumer sentiment—with the percentage of consumers optimistic about their household finances in the next year rising from 81 percent in Q1 to 84 percent in the latest survey.
More than half (59 percent) said they expected to be able to pay at least one of their current bills or loans in full, a four-percentage point improvement over last quarter.
Improved consumer sentiment influenced spending. On the topic of how consumers expected their household spending to change over the next three months, 31 percent indicated they plan to increase it – up two percentage points compared to Q1 results.
TransUnion noted noted an increase seen in the percentage of consumers who reported same or increased in-store and online purchases, tallying 61 percent in Q2, a two percentage point increase from Q1.
“Survey results showed that Gen Z consumers were seen to have the highest increases in both purchases made and plans to increase discretionary spending,” said Pia Arellano, president and CEO of TransUnion Philippines.
“With the momentum of the economy and relaxed COVID-19 restrictions, there are now more avenues for younger Filipinos to allot their finances beyond paying for necessities. These changing spending habits could also give insight into their attitudes towards credit as well,” said Arellano.
Results of the survey showed that while the percentage of consumers planning to apply for a new credit card remained unchanged, there was a decrease in consumers planning to apply for a personal loan – from 52 percent in Q1 to 46 percent in Q2.
Rising interest rates were one of the reasons given as impacting consumers’ decisions to apply for credit in the next year, with 84 percent of consumers saying rises were moderately or highly likely to impact their decision to apply for credit, up two percentage points from the previous quarter.
TransUnion said despite the negative impact of rising interest rates, there is a growing percentage of Gen Z consumers who see credit as an important financial tool. Among Gen Z consumers, 68 percent said that access to credit and lending products is extremely or very important to be able to achieve their financial goals, jumping three-percentage points from Q1 findings.
Gen Z consumers also demonstrated a strong desire to apply for new credit as well. Compared to Q1 results, more (a 10-percentage point increase) Gen Z consumers were planning to apply for a new credit card, more (a four-percentage point increase) for a new personal loan and more (a three-percentage point increase) for a new Buy Now Pay Later (product.
More consumers recognized the importance of monitoring credit reports as 41 percent of respondents saw this as “very important” in Q2. These findings mark a six-percentage point increase from the previous quarter. Among reasons why respondents checked their reports, report accuracy was seen to be the top factor at 61 percent, jumping nine-percentage points higher than in Q1.
“Credit understanding and effective management are key elements of financial health. Being knowledgeable about the state of your credit is a fundamental part of being an informed consumer,” said Arellano.
“Insights from our study show younger consumers increasingly engaging with the value of credit monitoring services. This is a positive sign that Filipinos are looking to take better control of their finances, ultimately enabling them to gain greater access to and responsibly use credit to unlock increased economic opportunities,” she said.
The TransUnion’s study surveyed 907 consumers in the Philippines from May 4 to 19, 2023.