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Strength of Remittances and BPO Boost Consumer Optimism

by: Sidney Liquigan

Thursday, April 5, 2018 |

Despite the weak peso, which is currently at an 11-year low against the dollar, consumer spending remains positive. In fact, in the Q4 2017 survey by FT Confidential Research (FTCR), 1,000 urban Filipinos confirmed their attachment to malls. 11% of the respondents said that they go to the malls every day and almost 25% of the respondents said that they will visit malls more often in the next 12% months. Further, 68% of the respondents said that the number of times they go to the malls will remain the same. In terms of spending, more than 25% expressed that they would spend more in the malls, while almost 50% said that their spending would remain the same.

Based on the positive survey results, FTCR expects shopping malls to remain profitable despite high inflation. This optimism among FTCR and consumers is mainly driven by the increased take-home pay as well as the growth of the BPO sector and remittances, the two pillars of the Philippine economy.

While inflation causes the prices of imported products to increase, it also increases the purchasing power of remittances. In 2017, OFWs transferred $1.3 billion, a 5.3% increase from 2016. Meanwhile, in the BPO sector, earnings increased 9.6% YoY in 2017. It was slower compared to 12.8% in 2016, but still on track with industry forecasts.

Thanks to the TRAIN Law, the take-home pay of middle-income workers has increased. And in December, the law will also raise the threshold on non-taxable 13th month pay and Christmas bonuses, allowing consumers to have more money to spend.

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