Consumer sentiment remained pessimistic in the second quarter due to elevated prices and lower salaries, while businesses were more optimistic because of the expected increase in sales driven by stronger demand for goods and services, the Philippine central bank said on Friday.
The Bangko Sentral ng Pilipinas (BSP) confidence index (CI) declined to 10.5% in the quarter ending June, from 10.4% in the first quarter, suggesting that the count of households with a negative outlook remained higher than those with an optimistic view.
Consumers attributed their negative sentiment in the second quarter to rising prices, lower income, limited job opportunities, and doubts about the effectiveness of government policies on various economic aspects, the BSP said.
Consumers were also less confident about the third quarter and the upcoming 12 months, according to the central bank.
The confidence index dropped to 4.6% for the third quarter, down from the previous 7.5%.
Similarly, for the next 12 months, the index declined to 20.5% from 22.7% recorded in the January to March period.
However, consumer hesitation towards purchasing major items decreased in the second quarter, with the confidence index improving from -72.8% to -67.7% compared to the previous quarter.
The BSP also observed an increase in the percentage of households with loans and a decline in the percentage of households with savings.
Meanwhile, the confidence index for companies climbed to 40.8% in the second quarter, up from 34% in the previous quarter.
The respondent companies were optimistic due to expectations of increased sales and production, post-pandemic recovery, a fully reopened economy, easing inflation, and a seasonal uptick in demand during the hot dry season, according to the BSP.
Business sentiment for the third quarter weakened to 46.4% (from 49%), and for the next 12 months, it declined to 58.5% (from 61.9%).
According to Redentor Paolo M. Alegre Jr., the director of the BSP Department of Economic Statistics, companies and consumers anticipate a potential rise in inflation and interest rates for the current quarter and the near term.
Inflation decreased to 6.1% in May from 6.6% in April, resulting in a five-month average of 7.5%.
On Thursday, the Monetary Board kept interest rates steady for a second straight meeting. The BSP raised borrowing costs by 425 basis points to 6.25% from May 2022 to March 2023 to tame inflation.
The BSP expects inflation to return to the 2-4% target range by fourth quarter. It sees full-year inflation at 5.4% before easing to 2.9% in 2024.
“Businesses anticipate that the peso may depreciate against the US dollar for the second quarter 2023 but may appreciate for the near term, while consumers expect that the peso may depreciate against the dollar for all reference periods,” Mr. Alegre said.
“Hiring intentions of firms may remain favorable for the third quarter 2023 and the next 12 months, which coincides with the households’ expectations that the unemployment rate may decline in the near term,” he added.
The nationwide consumer survey response rate for this quarter was slightly lower at 97.8% from 98.3% in the previous quarter. The business survey response rate also decreased to 59.4% from 60.6%.
The central bank interviewed 5,548 consumers for the survey held April 3-18, and 1,549 business owners for the survey held on April 5 to May 24. — Keisha B. Ta-asan
Consumer sentiment still bleak, businesses more upbeat — BSP survey
Source: Bantay Radio
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