MANILA — Household spending in the Philippines is expected to get a boost from the projected rise in real income in 2023, a report by Fitch Solutions Country Risk & Industry Research said.
In a report dated Nov. 8, a copy of which was sent to journalists on Wednesday, Fitch Solutions said it reduced its 2022 growth forecast for real household spending in the Philippines from 7.6 percent year-on-year to 5.5 percent.
However, it projects that household incomes will outperform inflation next year.
“(This) will ensure real income growth and greater potential for consumer spending,” it added.
The report said consumer spending in the country remains positive, partly because some workers have regained their jobs following a hit when the Covid-19 pandemic started in 2020.
It expects the unemployment rate to remain low at around 7 percent of the labor force in 2023 from the peak of 14.5 percent in 2020 when lockdowns were imposed because of the pandemic.
“We expect the level of unemployment to remain low, averaging around 7 percent of the labor workforce over the period 2023-2026,” it said.
Fitch Solutions projects the unemployment rate  in the country to be around 8 percent for this year and 6.7 percent both in 2023 and in 2024.
Philippine Statistics Authority data show that the unemployment rate in September 2022 declined further to 5 percent from month-ago’s 5.3 percent and 8.9 percent in the same month last year.
Although employment is expected to improve in the coming months, which will fuel consumer spending, the report expects inflation to remain elevated and hamper people’s spending capacity.
Fitch Solutions forecasts inflation to average at 5.6 percent this year, above the government’s 2-4 percent target band.
As of end-October this year, the rate of price increases in the country averaged at 5.4 percent.
The October 2022 print rose to its highest since December 2018 at 7.7 percent from month-ago’s 6.9 percent due to acceleration of food prices, among others. (PNA)