MORE than two-thirds of Filipinos surveyed are expecting a recession by the end of 2023, according to a study conducted by TransUnion, a consumer credit reporting agency.
“Consumers were anticipating a potential recession in the near future. 76% of respondents agreed the economy is either already in a recession or will enter a recession at some point by the end of 2023,” according to the study, which surveyed 1,013 adults between Aug. 19 and Sept. 1.
During the survey period, 44% said inflation was their top concern, up from 35% a quarter earlier.
In September, headline inflation hit 6.9%, the highest level in 13 years, driven by rising food, transport, and energy costs.
“This elevated inflation rate may serve as a trigger for the central bank to hike rates even further, pushing up borrowing costs for businesses and consumers. In addition, amid uncertainty about inflation, consumers started cutting back on discretionary spending and increasing savings,” the report read.
The Bangko Sentral ng Pilipinas will likely raise interest rates in its next policy-setting meeting in November to contain inflation. For the year so far, the Monetary Board has raised benchmark interest rates by a combined 225 basis points.
“As a precaution, consumers (have taken) action in response to a potential recession; 66% of respondents built up savings, while 69% of respondents reduced spending and 33% paid down debt,” the study found.
More than half of respondents chose to tap into their savings to pay down debt.
More consumers also expressed the intention to cut household spending, with around 54% focusing on areas of potential saving like dining out, travel, and entertainment in the last three months.
Some 79% of consumers said their income was stagnant, while respondents declaring confidence in their financial situation over the next 12 months fell to 81% from 83% a quarter earlier.
During the survey period, 27% of consumers said they turned to moneylenders in the past 12 months, up from 22% in the previous period, while 18% availed of payday loans, up from 14%.
Some 54% of respondents said they are planning to apply for personal loans while 41% were thinking of applying for a credit card.
“The need for transport is back as the country is on track to return to full normalcy, evidenced by an increase in respondents who planned to apply for an auto loan,” the study found.
“There appeared to be a rush to refinance mortgages and home loans before the anticipated interest rate hike, as the percentage of respondents who planned to do so jumped by 5% from the second quarter,” it added. — Luisa Maria Jacinta C. Jocson