Household consumption is expected to grow yet again this year, even with the slight decline in remittances seen in the months ahead, the Bangko Sentral ng Pilipinas said.
With inflation expected to remain benign, falling well within the official target range of 3 to 5 percent this year, the BSP said the purchasing power of households would continue to be propped up, sustaining their appetite for spending.
Also, the central bank reported that, with most businesses in the country planning to expand operations, more jobs would be generated, resulting in higher aggregate household incomes.
“Business sentiment remains optimistic, and this can bring about strong consumption expenditure for 2012,” BSP Deputy Governor Diwa Guinigundo told reporters. “Inflation has been maintained [within benign levels] and so the purchasing power of consumers has been preserved. We see this helping increase propensity of households to consume.”
Household consumption, a closely watched economic indicator, is one of the Philippines’ economic growth drivers.
Last year, household consumption grew by 6.1 percent, accelerating from 3.4 percent the previous year.
Consumer spending in the Philippines is partly supported by remittances, which may grow by 5 percent this year, lower than the 7.2 percent reported last year.
In 2011, remittances reached a record high of $20.1 billion.
According to Guinigundo, consumer optimism is also improving on the back of favorable macroeconomic indicators and expectations that the global economy will perform better this year.