SPENDING priorities in the Asia-Pacific region will likely shift next year to more discretionary items, particularly goods, the Mastercard Economics Institute (MEI) said in a report.The 'recalibration' will allow the manufacturing sector to catch up with services, which outperformed as economies reopened following the Covid-19 pandemic, allowing economies to post higher but below-trend growth.Consumer spending in the region will remain resilient, MEI said, with an easing of monetary policies likely to factor in how households allocate budgets.'Economies in Asean (Association of Southeast Asian Nations) and Oceania will enter their third year without pandemic restrictions in 2024,' MEI noted.'The progressive fulfillment of out-and-about demand should support a rotation of spend back into goods.'In the Philippines, consumers continued to spend more on discretionary items compared to essentials as of September this year for both the mass (approximately 66 percent vs. 33 percent) and the affluent (some 75 percent vs. 44 percent) as of September 23.Spending for essentials was up a quarter percent among the masses but fell a half percent among the affluent. Grocery purchases were down for both, but spending on fuel was up about 1 percent, reflective of higher pump prices.As for discretionary spending, travel and entertainment were ahead of discretionary retail in both categories. Drilling down further, spending was up with regard to dining and apparel/jewelry.Globally, MEI said that consumers and companies would face difficult decisions about spending next year given factors such as high interest rates and prices.'The backdrop, however, remains one of consumer empowerment with moderating inflation, steady real economic growth and varied regional dynamics,' it said.Most economies should see inflation ease next year, with the global average expected to moderate to 4.9 percent from 6.0 percent in 2023. The rate, however, will still be higher than the pre-pandemic 2.7 percent.The global economy, meanwhile, is expected to grow by 2.9 percent, slightly down from 3.0 percent this year.Growth across the Asia-Pacific is expected to be mixed.'On one end of the spectrum, Singapore, Malaysia, the Philippines, Thailand, Taiwan, and South Korea should see upticks while slowdowns are anticipated in Australia, the Chinese Mainland, Japan and New Zealand,' MEI said.'India and Indonesia are expected to hold largely steady at 2023 levels.'For the Philippines, MEI forecast real gross domestic product (GDP) growth of 5.6 percent next year, below the government's 6.5- to 7.5-percent target.Real consumer spending was projected to grow by 5.9 percent under a 5.7 percent inflation environment.Unemployment — at 4.2 percent as of October based on official data — could average 5.0 percent in 2024.MEI expects the Bangko Sentral ng Pilipinas policy rate to end in 2024 at 6.0 percent, down from the current 16-year high of 6.5 percent.Risks to the global outlook include geopolitical developments, which could be influenced by misinformation paired with generative artificial intelligence.An end to the wars in Ukraine and Gaza, as well as better relations between the West and China, 'could reduce uncertainties and support global trade, presenting upside risk to global growth.'Inflation dynamics and financial stability were also tagged by MEI, along with climate events and uncertainties about China's economy.Next year will see the global economy 'finding a new balance,' it said.'Relative to the prior three years, it will feel more 'normal' but not the normal of the pre-pandemic period.''The most important factor to underscore is that MEI believes the consumer, globally, is in good financial shape,' it added.'A strong labor market and healthy household balance sheets, on aggregate, should underpin spending. That said, it is worth monitoring how households cope with a higher payment rate for outstanding debt...'