Financial confidence growing in PHL but savings still low

The feeling of financial security and confidence in the short term is growing, though long-term confidence is weaker, according to the findings of a survey by Sun Life of Canada, Inc.

“These findings highlight both the resilience and the vulnerability of Filipino households. We are encouraged by the growing financial confidence and commitment to saving, but it’s clear that more support is needed to help families plan for the long term. Sun Life remains committed to empowering Filipinos through financial education, innovative products, and community engagement,” Sun Life Philippines Chief Executive Officer and Country Head Benedict C. Sison said in a statement.

Sun Life surveyed 1,000 respondents from the Philippines between April and May 2025.

Some 66% said they were confident in their ability to manage month-to-month finances, up from 57% a year earlier.

However, long-term financial confidence fell to 64% from 72% due to limited emergency savings.

“One in three Filipinos say that they could not last more than three months without external support following income loss or serious illness,” Sun Life said.

The survey also indicated that respondents are forced to  delay major purchases to focus on day-to-day survival.

Some 61% said they are focused on managing day-to-day expenses over the next 12 months, with 45% saying they are building emergency funds. Starting a business and paying or saving for their children’s education tied at 34%.

When asked what respondents will focus on in the next three to five years, the top priority was building financial security.

About 45% said their long-term priority is saving for retirement, followed by saving for a home and building a financial legacy for their children at 39%, then building an emergency fund at 37%.

“This shift underscores the impact of inflation and cost-of-living concerns on financial planning.

Nearly all respondents reported that inflation has affected their ability to cover monthly expenses. The biggest cost increases were seen in food (73%), energy (60%), health (43%), and transportation (41%). In response, many are cutting non-essential spending and educating themselves about personal finance,” Sun Life said.

Inflation Impact

“Trust in banks (55%) remains high but has slightly declined, and cost remains a barrier to seeking professional advice. The rise of AI and digital sources reflects growing comfort with self-guided learning,” Sun Life said.

The survey also found a growing commitment to financial discipline, with 67% of respondents saying they save or invest at least 10% of their income, with 78% reviewing their investments at least monthly.

financial-resilience-report-2025.pdf

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Source: Business World

Filipinos are tightening their belts

Filipino consumers are cutting back on spending and bracing for higher expenses even as most remain optimistic about future income prospects, a TransUnion study showed.  

TransUnion’s Consumer Pulse Study for the second quarter of 2025 showed that consumers were growing more cautious with their finances, with inflation continuing to top their concerns.

“Filipino households are approaching their finances with cautious optimism. While they’re aware of ongoing challenges like inflation and rising costs, many remain hopeful about their financial future,” said Weihan Sun, TransUnion’s research and consulting principal for Asia-Pacific.

“This mindset is reflected in their actions — cutting back on non-essential spending, saving consistently, and staying on top of debt,” Sun added.

While 73 percent of respondents said they expected their incomes to rise over the next 12 months, nearly half (44 percent) admitted they may be unable to fully pay at least one of their current bills or loans.

Inflation — cited by 83 percent of respondents — remained the biggest worry, followed by job security (59 percent) and interest rates (40 percent). The findings were said to have highlighted continued price pressures despite signs of improving income.

TransUnion said that almost half (47 percent) of Filipino consumers reduced discretionary spending on non-essentials such as dining out, travel and entertainment over the past three months. 

A quarter also canceled or scaled back on digital subscriptions and services, while 45 percent boosted contributions to emergency savings and a third accelerated their debt payments — signs of a shift toward financial prudence.

Spending projections for the next three months suggest this trend will continue, with 42 percent planning to trim discretionary expenses further and 43 percent expected to delay or cut back on major purchases.

“These forecasts suggest even if most consumers were optimistic about their financial status, they were nevertheless cautious of economic headwinds (especially inflation) and were adjusting expenditures,” TransUnion said. 

“The data indicates a financially active consumer base moving with the times to balance spending management with selective investment in their financial well-being,” it added.

While more Filipinos now believe they have sufficient access to credit —  44 percent from 38 percent a year ago — concerns about cost and rejection continue to discourage borrowing.

Over half (57 percent) of consumers who considered applying for new credit or refinancing existing loans ultimately abandoned their plans, mainly due to fears of being denied due to income or employment status (30 percent) or the high cost of borrowing (29 percent).

Even so, demand for credit remains steady. Among consumers intending to borrow in the next 12 months, Gen Z (58 percent) and Millennials (52 percent) led the charge, with personal loans, “buy now, pay later” options and new credit cards topping the list of preferred products.

“It is encouraging to see that more Filipinos now consider credit more accessible. However, the fact that over half of potential borrowers still walk away from their credit plans tells us there is still work to be done,” Sun said. 

“Lenders have an opportunity to bridge this gap by offering more inclusive solutions — ones that not only meet practical needs but also build trust and address the emotional barriers that often come with borrowing.”

The report also showed persistent cybersecurity threats and gaps in digital financial literacy. A majority (56 percent) reported being targeted by online fraud schemes in the past three months, primarily via phishing (44 percent) and smishing or SMS scams (40 percent).

While most took protective steps such as changing passwords or checking account activity, 15 percent admitted to doing nothing — with over half citing confusion about what actions to take.

Meanwhile, only 27 percent of consumers check their credit reports monthly, and one in five do not monitor their credit at all. Although the majority (68 percent) still consider credit monitoring important, this marked a dip from 72 percent last year.

Consumer-Pulse-Q2-2025-Report.pdf

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Source: Business World

PH firms less upbeat amid tariff worries

Business sentiment fell in the second quarter, the Bangko Sentral ng Pilipinas (BSP) reported late on Friday, primarily due to worries over unilateral tariffs ordered by US President Donald Trump.

The overall confidence index (CI) in the BSP’s latest Business Expectations Survey dropped to 28.8 percent from 31.2 percent three months earlier.

The primary concern raised by survey respondents, the BSP said, “was the potential economic effects of a 17-percent reciprocal tariff on Philippine exports to the US.”

“Although the higher tariff rate has been paused for 90 days and reverted to 10 percent, businesses still view this as a sign of rising global trade uncertainty,” it added.

“Businesses also expect fewer clients and orders in Q2 2025 due to the expected slowdown in business activity after the May midterm elections and the sugar off-milling season,” the BSP continued.

Sentiment was also lower with regard to the following quarter and the next 12 months, with the CIs for the two periods falling to 39.3 percent and 51.0 percent, respectively, from 45.4 percent and 56.4 percent.

For the third quarter, respondents cited global trade tensions that may be triggered by the US tariffs and also said that demand could drop due to the rainy season.

The more cautious year-ahead outlook, meanwhile, was attributed to the above factors and “expectations of fewer clients and orders due to expiring contracts and softer market conditions...”

Second-quarter sentiment was more upbeat among construction (38.2 percent from 35.8 percent), but declined for services (31.7 percent from 35.9 percent), wholesale and retail (31.8 percent from 34.1 percent), and industry (17.9 percent from 18.3 percent) sectors.

Anticipated projects during the summer lifted the construction sector outlook, the BSP said.

For the wholesale and retail trade and services sectors, the lower optimism was said to be “primarily due to concerns over US tariffs.”

“Additionally, weaker demand from rental contract expirations and client losses to competitors, further weighed on their sentiment,” the central bank added.

As for the next quarter, construction and services firms were less optimistic. The industry sector was more upbeat, meanwhile, while wholesale and retail trade sentiment was little changed.

Over the next 12 months, long-term confidence dipped in most sectors, with construction the exception.

Companies said that cash positions and credit access would remain tight in the second quarter while the hiring and expansion outlooks for the third quarter and the next 12 months remained positive but were lower compared to three months earlier. 

The peso is expected to strengthen against the dollar over all three periods, averaging P57.09:$1, P57.12 and P57.14, respectively, during the second quarter, third quarter and the next 12 months.

Inflation could rise due to election-related spending, US tariffs, fuel prices, agricultural losses due to bad weather and supply constraints, among other factors, but expectations remained within the government’s 2.0- to 4.0-percent target.

“Within-target inflation supports investments and job creation,” the BSP said.

Source: Manila Times