Let’s admit it. We tend to splurge on ourselves when times get tough. Some like to call it retail therapy, while others may just be looking for a way to motivate themselves to keep going. This explains why there was a surge in revenge spending in the years following the lockdowns. And up to now, people still get into the habit of indulging in their own luxuries, driving the demand for nonessentials.
READ: Why Filipinos Are Spending More on Leisure Items
Insights from HSBC Global Research showed Filipinos have been shelling out more money on leisure recently. Consumer spending is said to have gone up by at least 10 percent on restaurants, hotels, and recreational goods such as toys, musical instruments, and books, as well as services like gyms. Demand for transport—considered both a want and a need—grew by “double digits," too. The report says this could be because Filipinos are trying to have "more fun" somehow.
“Even in challenging times, the Filipino consumer has gone beyond covering the bare essentials and is now spending on goods and services that make daily living more convenient and, perhaps, more fun,” Aris Dacanay, an economist at HSBC, explained. “This suggests that when inflation does decline, overall household consumption will likely pick up, but perhaps, more on goods and services that are beyond just subsistence—the nicer things, so to speak.”
But it’s a totally different story for essentials. Surprisingly, demand is “substantially decelerating” for food and clothing items, according to HSBC. The same goes for household furnishing, although this was quite expected due to the successive spikes in interest rates, which probably affected the renovation plans of credit-dependent consumers.
Ultimately, HSBC attributes the shift in consumer preferences to the Philippines’ yearning to become an upper-middle income economy. This may not be that farfetched, as consumer spending takes up more than 70 percent of the country’s gross domestic product (GDP), or the total monetary value of goods and services it produces. Latest figures from the Philippine Statistics Authority showed household consumption expenditure grew by 4.6 percent from January to March this year.
HSBC Global Research—spearheaded by one of the leading universal banks, HSBC—provides research materials and market analyses to investors and other financial services stakeholders globally. Its coverage includes economics, currencies, equities, fixed income, as well as climate change.
*This story originally appeared on Esquiremag.ph. Minor edits have been made by the Preview.ph editors.
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