PH household spending likely to grow by over 6% in 2024

FILE: Commuters wait for public transport in Commonwealth Avenue, Quezon City on Monday (Aug. 7, 2023). (PNA photo by Joan Bondoc)

MANILA – Household spending is projected to rise by over 6 percent next year, as economic growth persists and consumption levels normalize, according to BMI Country Risk and Industry Research.

In a report released on Monday, the Fitch group subsidiary said household spending is forecast to grow by 6.3 percent year-on-year in 2024.

In real terms, the estimated value is PHP12.8 trillion.

“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 full year,” BMI said.

BMI said the positive outlook is in line with the forecast that the Philippine economy will grow by 6.

2 percent next year.

The report said that while consumer confidence “remains sluggish,” a significant improvement was already seen.

“The rising consumer optimism is fuelled by a more favorable job market with more jobs and permanent employment as well as higher incomes and remittances. We will continue to watch the consumer confidence indicator and amend our forecasts when necessary,” it said.

BMI said the easing inflation will also help support spending.

However, if inflation remains high for a longer period, this will affect consumer spending, it added.

Headline inflation remains elevated, settling at 6.1 percent as of September this year.

“This is the highest inflationary spike since May 2023 and is also one of the highest levels of inflationary spikes since the global financial crisis in 2008 as prices for household goods, clothing and non-essential spending categories have remained unchanged or have accelerated,” BMI said.

“Elevated inflation will thus continue to be a risk to the forecast, with respect to consumer spending in the Philippines,” it said.

BMI, however, expects headline inflation to decelerate to 4 percent in 2024 from 6.

1 percent in 2023.

According to BMI, the easing inflation “will positively benefit the prospects for Filipino consumers.”

“Easing inflationary pressures and healthy employment will form the base for stable consumer spending. Risks to this outlook would be higher-than-anticipated inflation and more aggressive economic weakness, which will weigh heavier on household purchasing power,” it said.