The surge in motorcycle purchases this year, coupled with the decline in car sales, paints a grim picture for the Philippine economy next year as government policies fail to establish a conducive spending environment, according to an international think tank.

In a Nov. 5 report obtained by Manila Bulletin, the Economist Intelligence Unit (EIU) noted that the country’s gross domestic product (GDP) could grow even slower next year compared to its initial projection of 4.6 percent.

Without taking into consideration additional data for household consumption, the EIU said signs of an even weaker economy are already apparent in the current trend in the purchases of motorcycles and cars.

Data from the Motorcycle Development Program Participants Association Inc. (MDPPA) showed that motorcycle sales from January to September grew 13 percent to 1.40 million units compared to 1.24 million units in the same period last year.

On the other hand, 343,410 vehicles were sold in the first nine months, down from 344,407 units a year ago. This is according to a joint report by the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) and the Truck Manufacturers Association (TMA).

This contrast, according to EIU, reflects “important weaknesses in the Philippine economy.”

The EIU said the increase in motorcycle sales represents the Marcos administration’s failure to implement a sound infrastructure and transportation policy.

“Despite migration from other provinces driving population growth in the greater Metro Manila area, Manila (the capital) still lacks a subway system,” the report read.

“This causes severe traffic congestion that motorcycle riders are able to navigate more easily than car drivers,” it added.

Analysts have said that the country’s poor public transportation are leaving Filipinos with no choice but to purchase a motorcycle in hopes of breezing through the highly congested roads.

Central to Marcos’ ambitious infrastructure initiative, otherwise known as the “Build Better More” program, is the long-delayed Metro Manila Subway Project (MMSP).

The EIU said delays in the construction of this program have undermined efforts to ease the worsening traffic congestion in the capital region.

“The main reasons for the delays were the pandemic and difficulties in acquiring private land for construction, with weak governance and funding constraints compounding the problems,” it said.

Moreover, the EIU noted that vehicle sales remain on a downward trajectory, with average monthly car sales this year approximately 20 percent lower than in 2015.

The think tank explained that this trend points to “constrained spending power in the low-to-middle income bracket.”

Citing a survey by the Social Weather Stations (SWS), the EIU noted that the number of Filipino families in Metro Manila who describe themselves as poor has risen to 43 percent.

Excluding the capital region, this figure jumped to 42 percent in Luzon. On the national level, half of Filipinos identify as poor.

The EIU said households suffered from severe balance-sheet damage during the Covid-19 pandemic, which continues to cast a long shadow of lower savings buffers and higher debt.

It noted that high inflation in the bottom 30 percent income level last year also played a role in limiting spending power.

“Although inflation has since decelerated, real spending power remains weakened,” the report read.

“Despite recent improvement, it will take time to feed into families’ economic self-perception and, in turn, restore willingness to spend on big-ticket items such as cars,” it continued.

Based on the latest data of the Philippine Statistics Authority (PSA), household consumption growth eased to 4.1 percent in the third quarter, slower than last year’s 5.2 percent.

Overall, the GDP growth in the first nine months averaged to five percent, out of reach of the government’s full-year target of 5.5 percent to 6.5 percent.