Amid the economic uncertainty and inflation, ING is seeing that revenge spending is in “full effect.” But households will also rebound in their savings that dipped significantly during the pandemic.
According to Nicholas Mapa, senior economist for Asia and the Pacific, ING, the three sectors that were hit hardest by the pandemic are also the ones experiencing growth: restaurants and hotels, recreation and culture, and transportation.
Mapa noted that household spending contributes 75% of the economy.
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Remittances may also, but not entirely, fund household spending and cannot be solely attributed to the funding of revenge spending. The reopening of the economy and return to offices are fueling not only spending basic necessities but also on leisure and transportation.
“However, growth is expected to slow from the 7.6% GDP growth that we enjoy in 2022 largely because revenge spending will eventually have to fade,” Maps said.
In terms of savings, Maps cited the Bangko Sentral ng Pilipinas’ data that before the COVID-19 pandemic, savings is at 38% but dipped significantly to 25%.
“It (savings) started to inch up as the economy was opening and people’s incomes are slowly restored,” Maps said. “Towards the end of last year, we saw a bit of a dip, which tells me that people are saying now let’s ‘break the bank’ and enjoy a vacation.”
But the inflation is keeping households in check and Mapa said people are also beginning to return to their spending behavior.
Maps also noted that “inflation to eventually slow in 2023 but be sticky downward.” Inflation peak may happen in the first quarter of this year.