FITCH Solutions Macro Research said it downgraded its 2020 household spending growth outlook for the Philippines to 3.4% from 5.8% previously before the coronavirus disease 2019 (COVID-19) outbreak.
Fitch Solutions said the lockdown imposed to prevent the spread of COVID-19 has altered purchasing
patterns, with households devoting funds to priority purchases such as food and health care and cutting out non-essentials.
“For consumers in countries where a lockdown has been initiated, and for consumers who believe that their governments might implement this measure, the spending focus is narrowing further, with a concentration on priority purchases (food and non-alcoholic drink and health spending),” it said in a note issued Tuesday.
Spending meant for food and non-alcoholic beverages will continue to gain traction throughout the year even though panic-buying has subsided, Fitch Solutions said.
Consumers could also prioritize health-related products. Fitch Solutions has noted reports of a surge in vitamin sales.
“We expect more over-the-counter medication sales, with consumers seeking medicine and health-related purchases during the pandemic,” it said.
Fitch Solutions said the worst-hit segments during the outbreak include clothing and footwear, which are being crowded out even in the e-commerce channel where platforms are emphasizing food delivery. It also noted that in China, clothing and footwear sales in March fell 46.8%.
Even if they wanted to, it said, consumers would be unable to spend on non-essential because many stores selling such goods are closed.
Fitch Solutions added that consumers will also cut down on electronics purchases as well as travel during the lockdown.
“However, streaming services like Netflix will see increased demand — the streaming service has already had to place caps on video quality to avoid overburdening its platform,” it said.
Fitch Solutions said it expects school fees and education spending to fall if the authorities order tuition fee refunds and waivers while schools are shut. It noted that the Commission on Higher Education has encouraged private universities and institutes to allow delays in tuition payments during the emergency. — Luz Wendy T. Noble