PHILIPPINE private consumption sets it apart in a region where such spending is more muted, ANZ Research reported, warning that credit card debt and salary loans are fueling the growth more than asset-creating loans like mortgages.
In its fourth quarter report, ANZ Research said household consumption accounts for over 70% of gross domestic product (GDP), but “growth in borrowings for asset creation (that is, mortgages) has been relatively muted, underscoring household concerns over income prospects. This pattern of spending is unhealthy.”
ANZ said domestic demand across Asian economies has softened, holding back growth, but the Philippines stands out as an exception.
“Except the Philippines, the private consumption impulse or the flow of new consumption relative to GDP, has either moderated or remained static in most economies,” it said.
Philippine GDP grew 5.5% in the second quarter, supported by a rebound in agricultural production and an acceleration in household spending.
Household final consumption expenditure rose 5.5% during the period.
ANZ Research flagged sluggish retail and auto sales as “frequency indicators” of weaker domestic demand in the region.
“As we have stressed in the past, the post-pandemic nature of job creation has been concentrated in low-paying jobs in segments like food and accommodation, which in turn has impacted consumption,” ANZ Research added.
The Bangko Sentral ng Pilipinas, citing preliminary data, reported that consumer loans grew 11.8% in July, slowing from 12.1% a month earlier.
Meanwhile, credit card loans rose 29.2% year on year in July from 29.9% in June. — Aubrey Rose A. Inosante