MANILA – The recovery in consumer spending in the country is “getting underway” this year supported by the government’s stimulus package and improving employment numbers, Fitch Solutions said Tuesday.
Fitch Solutions retained its consumer spending forecast growth for the Philippines this year at 5.7 percent, following the estimated decline of 7.9 percent in 2020.
“The Philippine government has been active in providing fiscal support for households,” it said.
The Fitch Group research arm added that monetary policy easing last year will result in looser lending conditions, which is expected to help support domestic demand.
It said the fiscal stimulus, which will feed through into household expenditure, will propel economic output for 2021.
Fitch Solutions forecast Philippine gross domestic product (GDP) this year to grow by 7.6 percent.
“The government has so far committed PHP595.6 billion (USD12.3 billion, or 3.1 percent of 2019 GDP) in fiscal packages towards vulnerable individuals and groups, which includes cash support programs for low-income households, tax deductions, and wage subsidies,” it said.
Moreover, Fitch Solutions’ optimistic projection hinged on more jobs and better income levels this year due to the gradual easing of restrictions and more reopening of business and economic activities.
The unemployment rate during the height of the lockdown soared to 17.6 percent in April 2020.
The joblessness rate settled at 8.7 percent in October 2020 as the government allowed more economic activities to bring back jobs.
As more jobs return in the market, the consumer confidence index improved from -54.5 in the third quarter of 2020 to -47.9 percent in the last quarter, Fitch Solutions said.
Likewise, an effective inoculation program against coronavirus disease 2019 (Covid-19) this year will return consumer confidence rapidly, it added.
In most spending categories, Fitch Solutions expects a reversal from negative growth in 2020.
Clothing and footwear spending is expected to increase by 8.9 percent this year from last year’s decrement of 15.9 percent; alcoholic drinks and tobacco spending, to rise by 10.4 percent from a 16.7-percent decline; furnishing and home spending, up by 12.7 percent from 15.2-percent decline; recreation and culture spending, up by 7.3 percent from -17.8 percent; and restaurant and hotels spending, up by 10.6 percent from -16.8 percent.
Food and non-alcoholic drinks spending is expected to post 5.3-percent growth, although lower than last year’s 9.3-percent increment. (PNA)
