Consumer spending has yet to fully recover

(UPDATE) Consumer spending in the Asia-Pacific region has yet to fully recover from the impact of Covid-19, according to Moody’s Analytics, especially in the Philippines where it remains significantly below pre-pandemic levels.

“Major shifts in consumer spending due to the Covid-19 pandemic have still not been fully reversed in many Asia-Pacific countries,” Moody’s Analytics economists Stefan Angrick and Jeemin Bang said in a report.

A salesperson waits for customers at the entrance of a store in a Beijing mall on April 16, 2024. AFP PHOTO

A mall security guard stands near an advertisement for a cryptocurrency exchange in Hong Kong on April 15, 2024. AFP PHOTO

Pedestrians protect themselves from the sun to combat the heat outside the Siam Paragon shopping center in Bangkok on April 1, 2024. AFP PHOTO

People visit an Apple reseller store iBox at a mall in Jakarta on April 17, 2024. AFP PHOTO

A man looks around as he rides the elevator at a shopping mall in a business district in Beijing on April 16, 2024. AFP PHOTO

Food delivery drivers rest at a shopping mall complex in Beijing on April 15, 2024. PHOTO AFP

People walk through a shopping mall complex in Beijing on April 15, 2024. PHOTO PHOTO

Spending on services has almost returned to normal in high-income developed economies, they said, especially in South Korea, Taiwan and Australia, but had yet to fully recover in Japan and New Zealand.

Spending in the Philippines and Thailand, meanwhile, remains much lower than before the pandemic – an indication of how much both economies have been hit by the pandemic.

“Tourism’s slow recovery is a contributing factor,” said economists at Moody’s Analytics.

They also revealed significant differences in goods consumption across the region, with Taiwan being a standout for its technology boom.

Meanwhile, in advanced countries such as Japan, South Korea, Australia and New Zealand, spending on goods is said to have remained stable.

In the Philippines and Thailand, this fell again due to low government support for households and the greater economic impact of the pandemic.

The slowdown in goods consumption in New Zealand, South Korea, the Philippines and Australia is believed to be due to factors such as persistent inflation and reduced government support that affected household spending.

Still, the economists noted that “goods tend to make up a smaller share of private consumption than services, so weaker goods consumption won’t completely derail these economies as long as services consumption stays on track.”

However, they pointed out that weaker spending on goods would compound the challenges these economies face, especially at a time of already slow growth.

In 2023, household spending growth in the Philippines fell to 5.6 percent from 8.3 percent in 2022.

Economic growth, meanwhile, slowed from 7.6 percent in 2022 to 5.6 percent last year.

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