Philippines nearing upper-middle income status, report
Consumers in the Philippines are gradually shifting towards consuming more non-essential items and spending less on essential goods and services.
Essential goods and services are usually defined as needs whereas non-essential goods and services fall into the category of wants.
An HSBC Global Research report released on May 30 indicated that more Filipinos are shifting towards a demand for restaurants, hotels, and recreational goods among others as opposed to the previous demand for more food, clothing, and household expenditure.
According to the report, although the decline in household furnishing may be a result of a high-interest rate environment, the weaker demand for food and clothing was surprising.
Aris Dacanay, economist at HSBC, said the 10% growth in spending on non-essential items forms part of government goals to make the Philippines an upper-middle income economy.
”Even in challenging times, the Filipino consumer has gone beyond covering the bare essentials and is now spending on goods and services that make daily living more convenient and, perhaps, more fun,” Dacanay was quoted as saying.
“This suggests that, when inflation does decline, overall household consumption will likely pick up, but, perhaps, more on goods and services that are beyond just subsistence—the nicer things, so to speak,” he added.
Household spending had decreased to 4.6 % in the first quarter, the weakest reading since the 4.8 % contraction at the height of Covid-19 pandemic in the first quarter of 2021, Asia News Network reported.
