Consumption growth in PH seen to hit 5.5% in Q4 2024

FILE PHOTO: Pedestrians pass by colorful Christmas lanterns that have sprung up as the holidays approach. The season marked by heightened consumption will cause even more traffic in the metropolis. INQUIRER/GRIG C. MONTEGRANDE

Consumption in the Philippines is expected to recover during the remaining months of 2024, with its bottom point already reached early this year, boding well for business revenues and the country’s overall economy.

Consumption in the Philippines is expected to recover during the remaining months of 2024, with its bottom point already reached early this year, boding well for business revenues and the country’s overall economy.

The latest analysis from the Bank of America (Bofa) released last week sees a 5.5-percent consumption growth in the Philippines in the fourth quarter of the year, recuperating from elevated inflation, unemployment, underemployment, and lagging wages.

“The consumption recovery should reflect in improved revenue growth among consumer companies which may be evident in the ongoing (2024 third quarter) earnings season,” reads the Bofa report.

It noted that consumption growth improved to five percent in the third quarter, better than the 4.5 percent recorded for the first half of 2024.

For the fiscal year of 2025, the Bofa said it is expected to further improve to 5.4 percent.

The report highlighted the significance of private consumption to the Philippines’ gross domestic product (GDP), the standard measure of the size of a country’s economy.

READ: Fitch unit: PH economy to grow by 6.3% in 2025; consumption tipped to recover

It said it accounted for roughly 73 percent and is its largest single component.

“Consumption is most sensitive to income, employment, consumer confidence, and remittances from overseas,” the report states.

It likewise said that consumption in the Philippines has been occasionally boosted by tax cuts in 2023 and the number of mandated wage adjustments implemented in 2022, 2023, and this year.

“Some of the anticipated consumption growth drivers have already begun to take root in (the third quarter of 2024), starting with a sharp slowdown in inflation,” according to the Bofa report.

READ: Philippine inflation rises to 2.3% in October

Earlier this month, the Philippine Statistics Authority (PSA) said headline inflation was at 2.3 percent in October.

It was slower than the 4.9 percent recorded last year but was up from the 1.9 percent in September.

Based on the data from the government’s statistics bureau, the rise was driven by higher prices in food, nonalcoholic beverages and transport.

The October data brought the average during the first ten months to 3.3 percent, lower than the 6.4 percent seen in the same time frame in 2023.