Consumer Spending in the Philippines Is Exceeding Expectations, Antonio M. Garcia Says
Consumer spending is on the rebound in the Philippines and in the United States, Chemphil chairman Antonio M. Garcia reports. Chairman Garcia notes that consumer spending in the Philippines in 2022 is expected to surpass ₱13.5 trillion, 2 percent more than had been predicted just six months ago.
The growth in consumer spending in the Philippines mirrors a megatrend of growing consumer spending in the US and globally, per Chairman Garcia. US consumers, in particular, have generated an astonishingly fast recovery after pandemic lows, benefiting both countries. US consumer spending rose to $337.2 billion for the month of January 2022, up a full 2 percentage points.
What Is Driving Consumer Spending in the United States?
Antonio M. Garcia interprets the expansive growth of consumer spending in the US as a natural outgrowth of factors that began before the pandemic.
American households had been reducing debt for several years before COVID arrived, leaving them in a better position to withstand the temporary reduction in their incomes. US households are now enjoying higher wages that have led to higher incomes without any historical precedent, Board Chairman Antonio M. Garcia says. This is setting the stage for sustained growth in consumer spending as millennial consumers enter their prime spending years.
The US Household Debt to GDP ratio is at its lowest level since 2008. This is due to record high wages, a 20 percent increase in household wealth year over year at the beginning of 2022, and healthy consumer balance sheets.
Surging energy prices due to sanctions on Russian oil create a wild card in this scenario, Antonio M. Garcia says, but the underlying factors for consumer spending in the US are healthy.
Percentage Growth in Consumer Spending Even Higher in the Philippines, Antonio M. Garcia Says
Consumer spending in the Philippines increased from ₱3.24 trillion to ₱3.92 trillion between the third and fourth quarters of 2021, according to the Philippines Statistics Authority. This rate dwarfs American consumer spending growth with an increase of 21 percent in just three months.
There are clear reasons for the explosive growth of consumer spending in the Philippines. Communities have become more mobile. Banks have updated their lending policies. Industrial output has increased, as have foreign remittances.
The key challenges for sustaining consumer spending in the Philippines are leveraging consumer spending for long-term fiscal stability and navigating price shocks in the energy sector. It is still necessary to deal with the scarring of the economy caused by the pandemic. The strength of Filipino consumer spending, however, provides a sturdy foundation for continuing economic growth.
About Antonio M. Garcia
Antonio M. Garcia has served Clinical Industries of the Philippines as Chairman of the Board for the past decade. He serves as incumbent director of Chemphil Manufacturing Corporation (CMC), LMG Chemical Corporation CAWC, and Kemwater Philippines.