Millennials, Gen zers worry about missing bills, loans payments as recession fears loom

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More than half of young Filipinos expect to miss payments on bills and loans while all age groups are cutting back on non-essential spending, adding to worrying signs an economic recession might be underway as consumers grabble with surging costs, according to a survey.

The third quarter Consumer Pulse Survey off US credit reporting company TransUnion also showed household savings rates were on the rise, with 76 percent of Filipinos believing the economy “is either already in a recession or will enter one by the end of 2023.”

Personal debt was a big concern for 47 percent of Filipinos but this was more pronounced for adults aged 41 and below, which represent the so-called Millennial and Gen Z population.

“Gen Z (58 percent) and Millennials (55 percent) who said they expect to be unable to pay at least one of their current bills and loans in full also said their leading choice of funding to pay these is by using their savings,” according to TransUnion.

The Philippine Statistics Authority said inflation surged to a four-year high to 6.9 percent last September, after prices jumped 6.3 percent the previous month.

The latest inflation print was driven by the faster rate of increases in food and non-alcoholic beverages; and housing, water, electricity, gas and other fuels.

Many economists believe local inflation has yet to peak, which could prompt the Banko Sentral ng Pilipinas to step up aggressive interest rate hikes that would raise borrowing costs for businesses and consumers.

The TransUnion survey showed Filipinos were preparing for a recession by increasing savings and cutting discretionary expenses such as dining out, travel and entertainment over the last three months.

“Filipinos said their greatest spending increases in the next three months are likely to be on bills and loans, medical care/services, and retirement funds and investing,” TransUnion said.

“They said they are least likely to spend more on large purchases like cars or appliances,” the company added.

Moreover, fewer Filipinos expect incomes to go up in the next 12 months.

“Baby Boomers (72 percent) and Gen X (58 percent) reduced their discretionary spending the most among age groups in the past three months, and Gen Z (69 percent) and Millennials (62 percent) said they saved more in emergency funds in the last three months compared to other generations,” TransUnion said.

The survey was conducted from Aug. 19 through Sept. 1 and covered 1,013 Filipino adults.

It also showed emerging trends on how Filipinos access credit.

Most respondents believe having access to credit and lending products is important in achieving financial goals, and 56 percent said they were planning to apply for new credit or refinance existing credit within the next year, according to TransUnion.

“More than half (54 percent) of Filipinos who said they plan to apply for new credit within the next year said that they would apply for a new personal loan, while 41 percent said that they’ll apply for a new credit card,” the company said.

The majority, or 80 percent, were concerned about sharing their personal information. This may be connected to more consumers saying they were targeted by digital fraud in the last three months.

“As more Filipinos’ financial literacy improves, TransUnion is optimistic that more people will have the knowledge and tools they need to make responsible financial decisions, particularly at a time when economic indicators reveal a stressed environment,” Pia Arellano, president and CEO of TransUnion Philippines, said in a statement.

“Filipinos are highly adaptable, but it takes a community, including the corporate and banking sectors, to come together to achieve greater financial inclusion and economic recovery and growth,” she added.