Research Briefing | Jul 8, 2022

Divergent consumption patterns persist despite recovery

consumption RB in iPad frame

Household consumption increased a robust 1.5% q/q in Q1. Spending exceeded our expectations, with the Omicron outbreak proving to be less of a headwind than was anticipated. Nevertheless, Omicron would have provided some drag on spending, and we expect the q/q pace of growth increased in the June quarter. Consumption has reached the level it would have been had the 2018-19 pace of growth been maintained from 2020 onwards (2018-19 was a particularly soft period; spending is still adrift of the 2010- 19 trend path). However, the headline consumption figure masks remarkable divergences across components.

What you will learn:

  • Household consumption has largely recovered to its pre-pandemic trend level. But aggregate levels mask a significant divergence across components. How quickly lagging components catchup to their pre pandemic trends will be an important determinant of consumption growth in H2 2022 and 2023; the importance of this catch-up growth to the consumption outlook has only grown as headwinds to household spending build.

  • Although spending on discretionary services is still well adrift of its pre-pandemic level, the outlook is positive; restrictions are all but gone and the release of pent-up demand for these services will support growth in the coming year. Mounting household budget pressures will slow this process, and the pandemic has likely introduced structural impediments to recovery.

  • Strong growth in spending on discretionary goods has mitigated the weakness in discretionary services components over the past two years. While the pace of spending is expected to ease, we do not expect to see a reversion back to the pre-pandemic trend.

Back to Resource Hub

Related posts

APAC consumption

Post

APAC’s consumption recovery will slow into 2023, but not reverse

With most of the continent finally treating Covid as endemic, we expect APAC's private consumption growth to remain resilient in 2023 and generally outperform other regions

Find Out More
residential house planning

Post

Further credit tightening weighs on residential outlook

Powered by HomeBuilder and record low interest rates, total building activity rebounded 13% in FY2021 to $131.21 billion (constant FY2020 prices). With the winding back of stimulus and capacity constraints biting, a modest 2% fall is estimated for FY2022.

Find Out More

Post

Asian Pacific city growth forecasts cut as macroeconomic problems bite

Asian cities are facing several challenges to economic growth, including the slowdown of the Chinese economy, supply chain problems, and commodity price inflation. We have reduced our average GDP growth forecast from our March release for the 33 leading Asian cities to 2.9% in 2022. But post-Covid-19 recovery momentum and the return of tourism will lessen the pain for many cities.

Find Out More