MANILA, Philippines — Consumer spending will maintain its resilient form amid a new wave of coronavirus infections but the long-term concerns remain, Pantheon Macroeconomics reported on Monday.
In a commentary, the research consultancy firm noted that despite the alarming rise of cases daily, projected to outpace figures during the Delta variant surge last year, sales data in the Philippines showed promise since it withstood several waves of infection in 2021.
"The question for the economy going forward is whether or not it can stomach another surge. The reassuring news from the net sales data is that catch-up momentum appears to be strong enough to ride out new waves of the virus," said Miguel Chanco, senior Asia economist for Pantheon Macroeconomics.
Chanco noted there was still "room left for domestic demand to play catch-up" since data showed net sales levels were still 4% below pre-pandemic levels.
Despite that, concerns in the long-term remain. Citing data, Pantheon Macroeconomics said remittances from overseas Filipinos are not rising as fast to justify the uptick in sales. Data showed cash remittances in the first 10 months of 2021 inched up 5.3% year-on-year to $25.93 billion.
The firm said sales data were still enjoying base and seasonal effects, which will dissipate once catch-up growth is exhausted.
That said, employment in the Philippines has yet to improve despite the latest data showing unemployment hitting its lowest of 6.5% since the pandemic started.
"But this still is some two-percentage points above the pre-COVID level and, more disconcertingly, demand for labour has yet to show any real signs of recovering," Chanco said.
Pantheon Macroeconomics crunched data and found that job openings have stayed at 235,000 since the third quarter of 2020, which is still less than half of the 2019 average.
The biggest consumer spending concern would be wiped-out savings of households and ensuing efforts to build it back, the firm noted. The economic tailspin as a result of mobility restrictions to curb the spread of the virus contagion left thousands of Filipinos jobless, especially in the months after pandemic fallout in 2020. As a result, many Filipinos were forced to dip into their savings to make ends meet.
Citing data, Pantheon Macroeconomics noted that by the end of 2021, 30.2% of households earned their savings back. This markedly improved from the 25.2% contraction seen from July-September of last year, when the Delta variant onslaught hit the country. Data still showed household savings are still below pre-pandemic levels of 36-38%.
"Another setback can't be ruled out in the current quarter, either, if Omicron forces households .to dip back into their savings, in the same way that Delta did in the third quarter," Chanco said.
"It comes as no surprise, then, that spending intentions remain very depressed, even though they've turned a corner," he added.