FILIPINO consumers are redirecting a growing slice of their spending toward online gambling, posing a new challenge for brick-and-mortar retailers already contending with slowing investments and tight household budgets, according to SM Investments economist Robert Dan Roces.
Roces said online gaming now accounts for around five percent of household spending, equivalent to P400 billion last year — matching national education outlays.
“That’s a new slice of the consumer wallet,” Roces said during the Cebu Province Economic Forum 3.0 on Friday, Oct. 10, 2025. “In Central Visayas, the share appears even higher, accounting for 15 percent of online gambling revenues — nearly twice the region’s gross domestic product (GDP) share.”
The economic forum was organized by the Cebu Chamber of Commerce and Industry in partnership with Cebu Province.
He warned that the rapid rise of app-based betting platforms could erode spending on discretionary goods such as apparel and dining.
“For retailers, this is an early warning signal,” Roces said. “Gambling isn’t necessarily bad for the economy, but it means pesos are flowing away from malls and stores.”
While household spending remains strong — making up 70 percent of GDP — Roces said these new “wallet diversions” could weigh on consumption-led growth if left unchecked.
“Our newest competitor is not another retailer or developer — it’s an app draining pesos that could have been spent in our malls,” he said.
Despite the shift, Roces expects retail and tourism in Cebu to remain strong through 2026, supported by stable prices and steady remittances.
“Cebuano consumers are quick to spend when rice and remittances cooperate, and quick to tighten when fuel and foreign exchange pressures rise,” he added.
‘Bellwether of middle-class resilience’
Roces said Cebu’s economy continues to outperform the national average, powered by resilient household consumption and tourism-led spending, but risks from slowing investment, import dependence and shifting consumer behavior threaten to test that momentum.
Roces said Central Visayas’ growth mirrors the national story — robust on paper but heavily reliant on household consumption.
“Cebu remains the bellwether of middle-class resilience,” he said.
Roces noted that household consumption in Central Visayas has grown faster than the national average since 2022, driven by remittance inflows and the recovery of retail and tourism.
However, he warned that investments outside key tourism corridors remain sluggish. “GDP is only as good as wallets,” he said, emphasizing that Cebu’s growth is still balancing on one leg — consumer spending — with limited new capital formation.
Inflation pressures have eased in Central Visayas, about 0.3 percentage points lower than in Metro Manila due to better rice and fish supply.
“Rice remains the megaphone of inflation — every peso change in its price rewrites the household budget,” Roces said. Lower rice prices since mid-2024 have helped stabilize inflation, now around 1.7 percent, and boosted discretionary spending in Cebu’s malls and restaurants.
Weak peso threatens Cebu’s small firms
Besides the rise of online gambling, the peso’s weakness against the U.S. dollar also poses headwinds. Roces said the strengthening U.S. dollar poses fresh risks to Cebu’s small and medium enterprises, many of which rely heavily on imported fuel, construction materials and goods.
“The peso’s real opponent isn’t Manila or Cebu — it’s the U.S. dollar,” Roces said. “Peso movements line up more with global dollar cycles than with local inflation. That means a strong dollar hurts Cebu’s import-dependent small businesses more than any domestic policy shift.”
He added that capital flight to other Asian markets is also a concern. “Because of recent political and corruption issues, hot money that should have flowed to the Philippine stock market is going instead to Cambodia and Vietnam,” Roces said.
Robust outlook
Despite these headwinds, Roces remains optimistic about Cebu’s medium-term prospects.
He expects Cebu’s economy to stay robust through 2026–2027, supported by stable inflation, lower rice prices, and growing logistics and tourism activity.
“Mall foot traffic and retail turnover will normalize as inflation stays tame,” he said. “Cebu’s consumer pulse remains one of the strongest in the country.” / KOC