FILIPINO CONSUMERS turned pessimistic on the outlook of the economy in the third quarter as they expect commodity prices to continue to rise in the near term, according to the Bangko Sentral ng Pilipinas (BSP).
Results of the central bank’s Consumer Expectation Survey showed a net confidence index of -7.1%, indicating that pessimists outnumbered optimists in the third quarter, after eight consecutive quarters of positive reading.
This is compared to the net confidence index of 3.8% in the previous quarter and 10.2% a year ago. It was also the lowest since the confidence index slumped to -8.1% in the fourth quarter of 2015.
Redentor Paolo M. Alegre, Jr., head of the BSP Department of Economic Statistics, said the negative outlook was due to “expectations of the continued increase in commodity prices, high household expenses, high unemployment, and no increases in their income.”
“Respondents also noted concerns on higher educational expenses and higher transportation expenses as reasons behind their gloomy prospects,” he said during a press briefing on Friday.
The central bank conducted the poll of 5,580 families from July 1 to July 14 that weighed the number of Filipinos with an optimistic outlook versus those who are pessimistic about local economic conditions, and of their family’s financial situation and income.
Philippines’ overall consumer outlook index
The survey also showed consumers turned pessimistic on the country’s economic condition with the confidence index at -17% in the third quarter, from 5.7% in the previous quarter and 13.9% in the year-ago period.
The outlook on family financial situation declined to -5.3% in the third quarter, from 0.2% in the previous three months and 7.6% in the third quarter last year.
Only the family income remained positive with a confidence index of 1%, although lower than the 5.5% last quarter.
Consumers generally had a negative outlook, with the confidence index for Metro Manila slipping to -2.5% from 7.8% in the second quarter. Those based in the provinces also turned pessimistic with a net score of -7.8% from 3.2% last quarter.
Low-income groups were the most pessimistic, with an index of -17.3% in the third quarter from -7.9% in the previous quarter. Middle-income consumers turned pessimistic at -2% from 12.6% in the previous quarter.
On the other hand, high-income consumers remained optimists, although less positive at 16.4% from 23% last quarter .
Looking ahead, consumers were less optimistic as the confidence index fell to 3.8% from 8.7% for the fourth quarter, and 13% from 23.1% for the next 12 months.
“Respondents cited expectations of high prices of goods, low salary or income, and rise in expenditures as reasons for their less upbeat outlook for the near term and year ahead,” said Mr. Alegre.
As prices are expected to rise, the survey showed the spending outlook index of households on basic goods and services went up to 45.7% for the fourth quarter of 2018 from 36.3% in the previous report.
“This indicates that the number of respondents who expect to spend more on goods and services increased compared to those who said otherwise,” he added.
BSP Deputy Governor Diwa C. Guinigundo that the higher spending outlook could add momentum to gross domestic product (GDP) growth.
“We can expect third quarter GDP may show some gains. There was some moderation in consumption spending in the second quarter,” he said.
GDP growth was lower than expected at 6% in the second quarter, from 6.6% in the first quarter and 2017’s comparable period.
Still, the survey indicated that consumers expect inflation and interest rates to increase, and the local exchange rate to depreciate in the next 12 months.
The BSP said that consumers see inflation at 5% over the next year, above the central bank’s 2-4% target.
“The number of respondents with views of higher inflation increased compared to that a quarter ago, reflecting stronger inflationary expectations over the 12 months,” said Mr. Alegre. — Elijah Joseph C. Tubayan