Experts Say That Household Spending Expected to Slow Down With Recession

Analysts have said that the government should expand its major growth drivers to rely less on consumption as household spending is expected to slow down with threats of a looming global recession.

“While it is true that much of the growth is coming from consumption, this is hardly stable and is coming mainly from the easing down of the lockdowns,” stated Ateneo de Manila University Economics Professor Leonardo A. Lanzona.

In 2022, the Philippine economy increased by 7.6%, which has been noted as the fastest economic growth since 1976. Data from the statistics authority reported that household consumption surged by 8.3% last 2022 from a previous 4.2% back in 2021.

For demand, household consumption was the largest contributor to the growth of the country’s gross domestic product (GDP) back in 2022. With the reopening of the economy, restaurant and hotel spending made the most contribution to household expenditures.

According to Sandeep Uppal, HSBC Philippines Chief Executive, the Philippines is being looked at as a destination for potential investments due to the “rising consumption.”

For the University of Asia and the Pacific Senior Economist Cid L. Terosa, he says that consumption could possibly wane with the threat of global recession and says that “Consumption spending heavily depends on disposable income, which could be negatively affected by a global recession. Although a major portion of the consumption spending of Filipinos is for necessities such as food, the potential impact of supply disruptions due to the global recession can exert upward pressure on prices and eventually curb consumption spending,”

Source: Business World