Philippine purchasing power seen to grow but key risks linger

Consumer purchasing power in the Philippines is projected to rise, BMI Research said, underpinned by steady economic growth and a tight labor market that supports real wage gains.

The outlook, however, faces risks from persistently high inflation, declining remittances and elevated household debt levels.

In a note to clients, BMI, a unit of the Fitch Group, held a “a cautious but positive” view on consumption in the country, expecting a slowdown in real household spending growth to 4.5 percent this 2026 from 4.7 percent last year.

This, BMI said, may weigh on the country’s gross domestic product (GDP), which historically gets about 70 percent of its fuel from consumer spending. The firm said GDP may grow by 5.2 percent this year, though still within the downwardly-revised government target of 5 percent to 6 percent.

“Spending will remain influenced by the elevated inflationary pressures as well as currently high debt levels, along with related debt servicing costs,’ BMI said.

“A tight labor market will support spending, as real wage growth returns to positive territory, which will support purchasing power over 2026,” it added.

The economy expanded by just 3 percent in the fourth quarter of 2025 — the slowest pace in more than 14 years outside the pandemic — and well below market consensus.

The weak outturn dragged the average 2025 growth to 4.4 percent, missing the government’s 5.5 percent to 6.5 percent target. Officials and analysts pointed to a mix of climate-related disruptions and the Marcos administration’s sweeping anti-corruption drive, which had curbed government spending and weighed on business and consumer confidence.

‘Tailwinds’ to growth

BMI shared the same view. “The recent weakness in consumer sentiment is driven by concerns over governmental corruption, spiking inflation and natural disasters,” it noted.

Looking ahead, the Fitch unit said improving outlook over the medium term means that consumers would expand spending, leading to a growth in consumption and providing tailwinds to the growth of the Philippine retail sector over 2026.

But the firm believes there are “wider economic challenges” that Filipino consumers will confront this year.

“In 2026, the consumer sector faces significant headwinds amid a highly uncertain macroeconomic landscape,” BMI said.

“Stubborn core and services inflation, escalating global trade barriers, potential labor market softening and widespread geopolitical uncertainty are shaping consumer behavior and market dynamics,” it added.

Source: Inquirer

E-commerce barriers remain high

Trust in online shopping and digital payments in the Philippines is among the strongest in Southeast Asia, but logistics barriers and uneven regulatory enforcement are hampering the growth of small businesses, a regional study found.

A report by Singapore-based Blackbox Research said three in four Filipino e-commerce leaders view the country as ahead of its neighbors in digital payment maturity and consumer confidence.

However, they warned that inefficiencies in delivery, infrastructure and regulation are acting as a “hidden tax” on micro, small, and medium enterprises (MSMEs).

“Filipino consumers have shown remarkable trust in the digital economy, but the systems supporting that trust have yet to reach full maturity,” said David Black, founder and CEO of Blackbox Research.

“The opportunity now lies in closing those structural gaps so that MSMEs can scale alongside consumer demand,” he added.

Philippines Competitiveness Rating

Barriers

The study interviewed 46 e-commerce leaders and experts across Southeast Asia.

Regulatory inconsistencies were cited as a major barrier in e-commerce industries, with 87 percent of respondents saying uneven enforcement allows some cross-border sellers to evade taxes and product certification requirements.

In the Philippines, logistical gaps remain one of the biggest hurdles. The cost of shipping accounts for 20 percent to 30 percent of the order value, double that of those in mature markets.

The 7,641 islands in the archipelago further complicate shipping. Delivery timelines vary from 24 to 48 hours in Metro Manila to as long as seven to 14 days for remote provinces.

And while investment into e-commerce technologies is high, the report said this focused primarily on visibility and customer acquisition instead of reliability, returns processing and customer support.

Optimistic

Despite these challenges, the Philippines recorded an e-commerce optimism score of 7.93 out of 10 for the next three years, among the highest ratings in Southeast Asia.

“If logistics bottlenecks and compliance burdens can be tackled, the country is well placed to convert digital confidence into inclusive, nationwide growth,” the report said.

To maximize the country’s potential, the study called for greater public-private investment in MSMEs, expanded regional logistics hubs and simpler compliance processes.

“For the Philippines, the task is clear: strengthen the systems that sustain consumer confidence and ensure MSMEs are not just participants but beneficiaries of the region’s digital transformation,” the market research firm said.

“Without decisive collaboration on logistics, regulation and innovation, the very trust that fuels growth today could become its greatest constraint tomorrow,” it added.

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Source: Inquirer

Pinoy Gen Zs emerging as self-rewarding, intelligent consumers–study

“Deserve ko ‘to!” (I deserve this!)

It’s a phrase that Filipinos have come to use to reaffirm their spending habits, which sometimes can be described as compulsive, especially when facing tempting discounts and promos that are offered right around pay days.

It’s a behavior that’s seen strongly among today’s Gen Z consumers, who spend primarily to reward themselves, says a recent study—one that is crucial for brands to understand in order to cater to this growing demographic, and facilitate immersive shopping experiences that promote convenience and appeal to their personal preferences.

The study, jointly conducted by Filipino-focused sociocultural research firm The Fourth Wall and communications firm Uniquecorn Strategies, says that three out of four Filipino Gen Z consumers living in urban areas shop online because they believe that they deserve it—a philosophy driven by their desire for happiness, fear of missing out on trends and the need to simply give themselves a gift for overcoming work or study-related stress.

The survey, conducted among 400 Gen Z consumers in Metro Manila, shows that 50 percent of a typical Filipino Gen Z’s finances come from parental allowances, while the other half come from full-time work, businesses, or side gigs. On average, they make six online purchases per month, ranging from a minimum of one to a maximum of 10.

Citing prior research, the study notes that there are about 41 million Gen Zs (born between 1996 and 2010) in the Philippines, making up about 38 percent of the total population, according to Philippine Statistics Authority’s latest official 2020 census.

“The young generation is rapidly becoming a significant portion of the consumer market, and is already shaping market trends, especially the e-commerce space,” says John Brylle Bae, research director at The Fourth Wall. “This self-rewarding behavior among Filipino Gen Zs stems from their growing self-awareness, driving them to seek rewards that affirm that sense of self-worth.”

The research, which leveraged machine learning clustering and social listening, also identify five dominant psychographic profiles of urban Filipino Gen Z consumers, who have distinct preferences and motivations:

• the Austere Austins, who prioritize budget-friendly options;

• the Budgetarian Bellas, who focus on cost-effective choices;

• the Frugal Fionas, who advocate for affordable and sustainable products; and

• the Deserving Desires, who seek rewards for their hard work and dedication.

Intelligent buyers

Overall, however, Filipino Gen Zs are intelligent buyers, the study states. They splurge based on quality (81 percent) and price competitiveness (10 percent), and are most likely to repurchase from the same brand that consistently delivers high-quality and affordable products. Still, they are willing to try other brands, even if they are emotionally attached to their preferred ones.

The study also shows that Filipino Gen Zs buy based on trust and personal affinity. Upon hearing about a product, 81 percent do their due diligence and look up customer reviews first on shopping platforms and Google.

Word of mouth, therefore, is still one of the primary ways they discover products (60 percent), while others rank social commerce ads (59 percent) as important to their shopping experience. They take cues from the people they deeply trust, which include friends and family. They are also more influenced by honest, objective, or out-of-pocket reviews from influencers or content creators with the right expertise.

These digital natives, naturally, also prefer the convenience of online shopping. Almost all the respondents (92 percent) use their own mobile phones for purchases and prefer cashless payment methods (53 percent).Given this, the study identifies several key opportunities for brands to connect with Filipino Gen Z consumers more effectively:

There is a significant potential for advertising on more personal yet credible emerging media platforms such as podcasts, and brands can leverage self-expression and identity in their branding to establish a personal affinity with target customer personas.

Tuning into these behaviors, says Uniquecorn Strategies founder and CEO Dean Bernales, will ultimately help brands come up with the right strategy to employ to capture the Gen Z market.

“Retailers should pay close attention to the shopping desires and needs of Filipino Gen Zs. Brands need to reassess their supply chain strategies and enhance their social commerce platforms to build trust, create personal connections and develop a relatable image to capture the young market,” Bernales says.

Source: Inquirer