Pinoys reduce spending, increase savings – study

By Mayvelin U. Caraballo, Manila Times

IN light of the anticipated slowdown of the economy, Filipinos have reduced their consumption and boosted their emergency savings, a research released on Tuesday by a global information and insights company, TransUnion, showed.

After a strong start to the year, the firm said respondents to its latest "Consumer Pulse Study" expect the Philippine economy to slow down and stop growing quarter on quarter.

"This is highly attributed to the election season affecting spending and investment of both the government and private sectors. Additionally, the local inflation rate increased to 5.4 percent in May due to the continuous global oil price hikes," it said.

Majority or 56 percent of the 1,005 respondents surveyed by TransUnion between May 26 and June 7 this year indicated they had saved more money for emergencies.

In addition, 43 percent of the respondents said they reduced their discretionary expenditure, such as going out to eat, while only 22 percent said they raised it.

Among generations, the company said, Gen X (those born from 1965-1979) and Baby Boomers (born 1944-1964) reported making the most cuts, at 49 and 47 percent, respectively.

Furthermore, it added, "the majority of Filipino consumers were looking to maintain this trend; 61 percent expected large purchase spending to decrease or stay the same."

The category with the highest reported spending rise, however, was bills and loans, where 48 percent of respondents see spending more over the same time period.

On the respondents' ability to pay bills, TransUnion said 46 percent said they could not pay at least one of their existing loans or payments in full.

Nearly half or 46 percent of the respondents plan to utilize money from savings to continue paying bills and loans for those who said they would be unable to pay at least one bill or debt.

Among all generations, Gen Z respondents reported favoring this strategy the most, with 49 percent doing so.

"Most Filipinos (96 percent) believe in the importance of having access to credit and lending products to achieve financial goals," the firm said.

Forty-three percent of respondents overall say they have adequate access to credit and loan options.

Study: Gen Zs need greater finance access

According to the study, Baby Boomers held the majority with 55 percent of the vote, followed by Millennials (born 1980-1994) and Gen Z with 44 and 41 percent, respectively.

Over half or 55 percent of all respondents, TransUnion said, intended to seek new credit or refinance existing credit during the next 12 months.

In a statement, Pia Arellano, president and chief executive officer of TransUnion Philippines, said while credit can stimulate economic growth, many consumers feel excluded or are denied credit because lenders are unable to assess their credit risk with sufficient accuracy.

The study found that 54 percent of customers thought their credit scores would rise if companies used data not present in a typical credit report, she added.

In order to give more Filipinos access to credit during these difficult times, Arellano pointed out, "this use of alternative data in credit scoring and decisions can significantly increase levels of financial inclusion across the country."