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Philippines: Modest growth seen in consumer spending
MANILA, Philippines – BMI Research said the positive economic outlook and rising household income is likely to translate to a modest 5.4 percent growth in real consumer spending between 2017 and 2021.
In its latest industry trend analysis titled “Modest growth in Philippine consumer spending,” the research arm of the Fitch Group said the projected expansion in real consumer spending between 2017 and 2021 is slightly above the average annual growth of 5.1 percent recorded from 2000 to 2014.
BMI Research said household spending is set to grow at an annual average of 9.3 percent to P16.6 trillion in 2021 from the projected P11.7 trillion this year.
However, it said household spending would book a modest deceleration this year on the back of accelerating consumer prices.
“With that said, we expect essential spending to remain dominant throughout our forecast period due to low income levels and a large rural population. Housing and utilities will experience the greatest gains over our forecast period as costs in the sector will demand a greater proportion of household incomes,” it said.
BMI Research said essential spending would remain dominant, accounting for 75 percent of total household spending by 2021 from 74 percent in 2017.
It pointed out essential spending would grow by an average annual rate of 9.5 percent between 2017 and 2021 while non-essential spending would expand by 8.4 percent.
“As a result of low average incomes and a large rural population, essentials will continue to account for the majority of household spending in the medium term at least,” BMI Research said.
It said food and non-alcoholic drinks, housing and utilities and transport would continue to account for the majority of household retail spending.
Albeit declining, it said the share of household spending on food and drink would remain the largest at 37.3 percent in 2021 from 38 percent in 2017.
“Non-essential spending is expected to continue to account for a roughly stable portion of total household retail spending over our forecast period. Real wages are steadily on the rise, however, which should boost spending in the non-essentials sector over the long term, and will prompt consumers to upgrade to higher quality essentials,” it said.
Household spending in the Philippines is dominated by spending on food and non-alcoholic drinks; housing and utilities and transport accounting for 69 percent of total spending.
“We expect spending patterns in the Philippines to remain fairly static over the medium term with the top three spending categories retaining their positions,” BMI Research said.
Source: http://www.philstar.com/business/2017/06/12/1709005/modest-growth-seen-consumer-spending