Consumption lifted by remittances, lending

BW FILE PHOTO

GROWTH in wholesale and retail trade was sustained last year on strong consumption supported by the increasing presence of online platforms for buying and selling.

According to government data, gross value added in trade and repair of motor vehicles, motorcycles, personal and household goods grew 7.2% year on year, inching up from 2015’s 7.1%.

Accounting for nearly 80% of the total output in the sector, the retail trade sub-group expanded 6.5% last year, 0.4 percentage points higher than the year prior.

Growth in wholesale trade was strong as well albeit decelerating to 9.8% from the 11.2% it recorded in 2015. Meanwhile, the maintenance and repair of motor vehicles, motorcycles, personal and household goods was recorded at 11.3% from 13.1% previously.

Nevertheless, consumption, which accounts for around two-thirds of the country’s gross domestic product, remained one of the country’s growth drivers, rising 7% in 2016 from 6.3% in 2015. Remittances from overseas Filipinos, known to support local consumption, grew 5% year on year, the fastest since a 7.2% annualized increase posted in 2014, and beating the central bank’s forecast of a 4% climb for the year.

Analysts attributed this sustained growth in household consumption to high consumer confidence, modest inflation as well as favorable labor market conditions.

Another factor is the country’s modest interest rates fueling households’ and corporates’ propensity to borrow. Central bank data show household credit totaled P780.81 billion in 2016, soaring by 22.5% from the P637.51 billion extended by banks a year ago. Since 2010, consumer loans have been growing by double digits, with the total breaching the P1-trillion mark in 2015 given a surge in borrowings to acquire cars and homes.

Rising consumer credit comes on top of increased lending for corporates, especially now that the government is pursuing an infrastructure push with big-ticket projects on the pipeline. – Jochebed B. Gonzales