Household spending in the Philippines is projected to grow 6.3 percent in 2024 on easing inflation, according to BMI, a Fitch Solutions Company.
“Household spending growth will be more positive, relative to 2023, as economic growth persists, and consumption levels normalize,” BMI said in a report dated Feb. 1.
It said that in real terms, the value of household spending would amount to P12.8 trillion in 2024.
“We hold a positive outlook for consumer spending in the Philippines over 2024, as the economic recovery feeds through to strong real consumer spending growth over the year,” BMI said.
“Our forecast for year-on-year growth in consumer spending in the Philippines over 2024 is in line with our country risk team’s forecast that the economy will grow by a real rate of 6.2 percent y-o-y over the year,” BMI said.
The Philippine economy, as measured by gross domestic product (GDP), expanded by 5.6 percent in 2023, slower than the government’s target range of 6 percent to 7 percent.
The government expects a GDP growth of between 6.5 percent and 7.5 percent in 2024.
BMI said spending would remain affected by an environment of elevated inflationary pressures over 2023, high debt levels and servicing costs.
“However, easing inflation and a tight labor market will support spending, as real wage growth returns to positive territory, supporting purchasing power over the year,” it said.
BMI said consumer confidence in the Philippines remained sluggish, although the overall trending of the indicator showed a steady improvement from the pandemic years where consumer confidence sank to -54.5 at its lowest.
Consumer confidence stood at -19.0 in the fourth quarter of 2023.
“Rising consumer pessimism is fueled by a less favorable job market, with fewer jobs and permanent employment as well as lower incomes and weaker household financial situations. We will continue to watch the consumer confidence indicator and amend our forecasts when necessary,” BMI said.