Household spending expected to stay resilient in 2026

MANILA — Domestic consumption is projected to remain resilient in 2026, supported by expanded social protection programs and sustained inflows from overseas Filipino workers (OFWs) and the business process outsourcing (BPO) industry.

Speaking during an online briefing on Tuesday, Maybank Investment Banking Group economist Azril Rosli said the Philippine economy showed signs of rebalancing in 2025, with growth increasingly driven by higher-value services. He pointed to the growing contribution of net external demand to overall economic expansion.

Despite this shift, Rosli emphasized that household spending continues to play a central role in the economy, accounting for roughly 73 percent of gross domestic product (GDP).

Maybank estimates show private consumption expanded by 4.8 percent in 2025 and is expected to maintain the same growth rate this year. Government consumption, meanwhile, is estimated to have risen by 9.4 percent last year but is projected to moderate to 4.8 percent in 2026.

Overall consumption is expected to remain strong and underpin economic growth of around 4.8 percent in 2025 and 4.9 percent this year. These projections, however, fall below the government’s revised growth target range of 5 percent to 6 percent for 2025.

Household spending continues to benefit from steady remittances from OFWs, which account for about 10 percent of GDP, alongside contributions from the BPO sector.

Rosli said remittances are expected to “support and provide continued measures to actually help weather the tariff uncertainties,” citing robust inflows from the United States, Singapore, Saudi Arabia, and Japan.

He added that remittances also help reinforce the country’s external position despite the peso’s weakness against the US dollar.

“Remittances are larger than the FDI (foreign direct investments) and more stable than portfolio flows, making them the single most important external anchor for the economy,” Rosli said.

On the role of the BPO industry, Rosli said it “is one of the contributing factors towards anchoring the GDP towards the positive trajectory.”

“It could actually lift up the labor market to make the labor market more positive and to also contribute towards the overall positive outlook for the economy,” he added. (PNA)

Via: Cool Cherry Trees