Household spending expected to fully recover in 2022

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Metro Manila (CNN Philippines, July 29) — Filipinos are expected to spend more starting this year, ushering the full recovery of consumer spending in 2022, a global research company said.

In its latest commentary, Fitch Solutions forecasted household expenditure to expand by 4% this year — shifting from the 8.3% plunge recorded last year as coronavirus woes and lockdowns held back both consumer and business activity.

The firm said overall spending could reach ₱10.6 trillion in 2021 — still down from the ₱11.1 trillion in pre-pandemic 2019.

Fitch projected a 5.1% surge in private spending in 2022 in what it calls a "full recovery," with total expenditure possibly hitting ₱11.2 trillion. "More conventional" growth shall return the year after, it added.

Fitch also forecasted better unemployment figures this year. From 14.5% in 2020, the rate is expected to ease to 11%.

"While this is still higher than a pre-Covid environment (the unemployment rate averaged 5.1% over 2019), it indicates an improving economic and employment environment, which will bolster consumer confidence and spending," the company said.

While confidence among consumers remains muted based on the central bank's latest expectations survey, Fitch noted the recent results still exhibit improvement from figures logged in late 2020.

"This better outlook comes from expectations that there will be more jobs and better incomes, fewer quarantine restrictions, and more businesses reopening," Fitch said.

With the Philippine economy primarily being driven by household spending, the company said it also expects a 5.3% growth in gross domestic product in 2021 from the record 9.6% dive last year.

This prospect, however, falls below the dialed-down 6-7% target band set by economic managers for the year.

"Economic growth will be underpinned by consumer spending, easing unemployment, and a continued recovery in the country's tourism industry," Fitch said.