Household spending in the country this year is projected to slow down due to the quarantine measures implemented by the government amid the coronavirus disease 2019 outbreak, a unit of Fitch Group said.
In a report dated March 31, Fitch Solutions said household spending in the country would grow by 6.7 percent in 2020 as consumers are confined to their houses during the quarantine period.
The 6.7-percent household growth outlook is slightly lower from its initial projection of seven percent.
The country’s household spending in 2019 expanded by 9.8 percent.
“Philippines’ consumer and retail sector is expected to be one the sectors hardest hit by the month-long lockdown of Luzon island, where 50 percent of its population resides and which accounts for 73 percent of the country’s GDP (gross domestic product),” Fitch Solutions said.
President Duterte announced the initial community quarantine in Metro Manila starting March 15 to April 14, then expanded it to the entire island of Luzon under enhanced community quarantine from March 17 to April 12.
The enhanced community quarantine has forced some businesses to temporarily suspend their operations.
Malls, except for their units associated with grocery, pharmacy, and takeout and delivery food services, were also closed during the quarantine period.
There is also a limited movement of people, wherein only those with quarantine passes were allowed to go outside their homes to buy food and medicine, as well as accessing banks and remittance centers.
“There has been evidence of panic buying, especially in dense urban areas such as Metro Manila where relatively richer urban consumers can afford to stockpile,” Fitch Solutions said.
While spending on food and alcoholic drinks, as well as health categories, would rise this year, Fitch Solutions is seeing a reduction in purchases in the following segments: clothing and footwear, furnishing, transport, recreation and culture, and restaurants and hotels.
Fitch Solutions said a more robust fiscal stimulus package is needed to have more impact on the economy.
“However, we note that the current stimulus package, worth only P27.1 billion ($500 million), is unlikely to have a considerable impact on the Philippines’ economy or consumer spending,” it said.
Fitch Solutions said Malaysia, with less than one-third of Philippine’s population, announced a stimulus package worth $57 billion.
Another P200-billion ($3.9 billion) package was introduced by the government through the newly passed Bayanihan Act.