Household consumption in the Philippines is poised to slow further as the growth of remittances—an important driver of domestic demand—has eased amid ongoing tensions in the Middle East.
Cash transfers from overseas Filipino workers rose 2% year over year in April, reaching an 11‑month low of $2.718 billion. This marks the weakest annual expansion in nearly four years, following a 1.8% increase in May 2022.
Year‑on‑year growth has tapered from 3.5% in January to 2% in April, and month‑on‑month flows have become more uneven as early‑stage disruptions linked to the conflict affect payments from the region.
Remittances from the Middle East accounted for roughly 18% of total inflows, totaling $2.045 billion in the first four months of the year—a 3.6% rise from the same period last year.
Household spending, the main engine of the Philippine economy, grew 3% year over year in the January‑March quarter, down from 5.28% a year earlier and 3.8% in the previous quarter.
Inflation remains above the central bank’s target range, easing to 6.8% in May from 7.2% in April, while the average for the first five months was 4.5%. The bank has recently lifted its annual forecast to 6.4%.
Economic forecasters anticipate that remittance inflows will continue to expand, albeit at a modest pace, as overseas workers maintain support for families despite global uncertainties and rising living costs abroad.
Should inflation persist, households—especially those reliant on remittances—are expected to trim discretionary spending on retail, housing, travel, and durable goods before cutting essential purchases, leading to a moderation rather than a collapse in consumption growth.
