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Study bares Pinoys expect income to grow in 2023, wary on the impact of recession

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Global information and insights company and the Philippines’ first comprehensive private credit reference agency, TransUnion (NYSE: TRU), today released its latest quarterly Consumer Pulse Study. Findings show that Filipinos are optimistic about their household income but are wary of recession and spending.

Consumer confidence held back by worries over recession and inflation

The majority of Filipinos surveyed (80%) expect their income to increase in the year ahead, and almost three-fifths (57%) say they will be able to repay bills and loans. These findings are buoyed by stronger-than-expected GDP growth and rising employment after the country lifted nearly all COVID-19 restrictions. 

However, Filipinos are less optimistic about the wider economic outlook, with 42% expecting the country to go into a recession in 2023, up by a significant 15 points from the previous quarter.

“Consumers’ mixed sentiments reflect the complex dynamics facing the Philippines along with many other nations, as the world continues to recover from more than two years of disruptions”, said Amrita Mitra, chief operating officer of TransUnion Philippines. “Filipinos are, on one hand, bullish on their household income on the back of strong growth momentum and a growing job market in the past year. On the other hand, there are also high inflation and rising interest rates seen both domestically and worldwide that will continue to weigh on the national economic outlook and consumer spending.”

Additional study results show that inflation remains the top concern for the fourth consecutive quarter, with 82% being very or extremely concerned about the inflation rate, 3 points higher than last quarter. When asked about how they plan to deal with a potential economic slowdown, around three-quarters of Filipinos plan to cut back on spending (72%) and build up savings (69%). Across generations, the youngest group, Gen Z, appears to have the highest appetite for savings (74%) but the lowest desire for reducing spending (65%). In contrast, Baby Boomers are least keen on savings (49%), and Gen X are themost open to reducing spending (78%). 

More consumers look to seek new credit but lack access

Almost all Filipinos surveyed (96%) believe access to credit is important to achieve their life goals, but less than half (45%) say they have sufficient access to credit and lending products.

Surging inflation and price hikes may have given rise to increased consumer demand for new credit. In fact, the percentage of consumers seeking new credit has increased steadily for four quarters in a row, reaching 57% at the yearend, up from 46% at the beginning of 2022. 

Among those seeking new credit, personal loans (53%) and credit cards (39%) continue to top consumer credit products. However, rising interest rates appear to be a key factor affecting Filipinos’ decisions onseeking new credit. Close to half the respondents (46%) say that rising interest rates highly impact whether they would apply for new credit, up 8 points from a year ago. 

“As the Philippines looks to sustain its growth momentum against the backdrop of global economic uncertainties, the need to advance financial inclusion has never been more vital,” added Amrita Mitra. “Financial inclusion and credit literacy are not merely about understanding credit, but more importantly, leveraging the power to access opportunities made possible by informed financial decisions and responsible lending. This is crucial as consumers in the Philippines build resilience to navigate any economic uncertainties in the year ahead.” 

TransUnion’s Consumer Pulse Study surveyed 1,005 consumers in the Philippines during November 3-15, 2022. This quarterly study examines shifting consumer attitudes and behaviors based on the dynamics of income, debt, and identity theft, with respondents ranging from Gen Z (born 1995-2004), Millennials (born 1980-1994), Gen X (born 1965-1979), and Baby Boomers (born 1944-1964). For more information, please view the full report of the Consumer Pulse Study.

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