Customers look for cheap clothes at a market in Taytay, Rizal. — PHILIPPINE STAR/ MICHAEL VARCAS
“We think consumption in ASEAN will slow in 2023 but in varying degrees; consumption in the Philippines will likely slow down the most, while Vietnam, Malaysia and Singapore may show some resilience,” HSBC said. Inflation remained elevated in the Philippines, averaging 5.6% in 2022. In January, headline inflation further accelerated to 8.7% from 8.1% in December, in contrast to downward trend in most ASEAN countries.
“The Philippines saw the purchasing power of its wages decline significantly, wherein the rise in the cost of living almost doubled compared to the rise in wages. This deterioration will likely take a toll on consumption in 2023 as households find their way around to make ends meet amid the squeeze in household budgets,” HSBC said.
HSBC expects the BSP to raise rates as high as 250 basis points above pre-pandemic levels, which may hurt borrowing and consumption. Domestic consumption remained strong as the economy reopened. It expanded by 7% in the fourth quarter, slightly slower than 8% in the third quarter and 7.5% a year earlier. For the full year, household consumption rose by 8.3% from a year earlier.