How Filipinos see inflation and recession

FINDINGS from the latest TransUnion Consumer Pulse Study held in the second quarter of 2023 showed that 41 percent of Filipinos were "very concerned" by the current rate of inflation — up 6 percentage points from the results of the previous quarter.
Inflation can be defined as the rise in the price of goods and services. As inflation rises, governments and central banks across the world often increase their interest rates in response to try and tame inflation. Rate rises are designed to slow down spending and prevent the economy from overheating.

Although slowing down spending, and thus economic activity, doesn't always lead to a recession, it can often be a fine balancing act. While both economic phenomena (inflation and recession) are intrinsically linked, inflation and recession are not the same. A recession is an economic downturn typically defined as two consecutive quarters of shrinking gross domestic product (GDP). While they can be triggered after an inflationary period, recessions can also be caused by global supply chain disruptions, a financial crisis or other world events.
Local attitudes
Looking at where we are now, figures from the Philippine Statistics Authority (PSA) showed that inflation cooled down to 5.4 percent in June. This marks the fifth straight month of deceleration from a 14-year peak of 8.7 percent in January of this year.
The continued decrease in the country's inflation rate is a welcome development to go along with how Filipinos currently feel about their household finances. Additional findings from the TransUnion Consumer Pulse Study showed that 84 percent of Filipinos are optimistic about the state of their household finances in the next year, while 40 percent of Filipinos agree that their household income is keeping up with inflation. Additionally, when asked whether they thought the Philippines would enter a recession by the end of this year, the majority of Filipinos said they did not see it happening.

However, despite the optimism shared by consumers overall regarding their finances, the same cannot be said for members of the unbanked consumer population. Results from the inaugural TransUnion Credit Perception Index report show that 53 percent of unbanked Filipinos find themselves with limited money by the end of the month, while 33 percent of them have trouble paying their bills on time. While most unbanked Filipinos have knowledge of credit concepts and products that could help them access funds when needed, their awareness falls behind that of the general population. The same goes for their trust and favorability toward credit products as well.
These gaps in knowledge, trust and favorability toward credit are what lead many unbanked Filipinos to borrow from informal lenders. Doing so usually circumvents the perceived difficulties of borrowing from a bank, such as lengthy requirements. However, borrowing from informal lenders is often costlier and can place unbanked Filipinos in highly disadvantaged positions when it comes to paying their loans back.