Consumers, businesses feeling less optimistic about economy

MANILA, Philippines — Consumer and business sentiment in the Philippines dipped for the first quarter of the coming year as both Filipinos and companies became less optimistic about the economy due to rising prices and increasing borrowing costs, according to the Bangko Sentral ng Pilipinas (BSP).

Redentor Paolo Alegre Jr., senior director at the BSP’s Department of Economic Statistics, said in a virtual press conference that consumer optimism weakened for the first quarter of 2024 after turning more pessimistic in the fourth quarter of this year.

The fourth quarter 2023 Consumer Expectations Survey (CES) showed that the overall consumer confidence index of Filipinos slipped further to 5.6 percent from 7.8 percent for the first quarter of next year after turning more negative, to -19 percent from -9.6 percent in the fourth quarter this year.

Alegre said the confidence index for the next 12 months also declined to 15 percent from the previous survey result of 18.9 percent.

“The less upbeat outlook among consumers for both periods was attributed mainly to their expectations of faster increase in the prices of goods, lower income and fewer available jobs,” he said.

Alegre pointed out that pessimism remained in the fourth quarter due to concerns about the faster increase in the prices of goods, lower income, fewer available jobs as well as the effectiveness of government policies and programs on inflation management, public transportation, and financial assistance to low-income households.

“Similar to the Philippines, consumers in the euro area, South Korea and the US were also more pessimistic. However, consumers in Australia, Japan, Taiwan, and Thailand were less pessimistic while those in Indonesia were more optimistic,” he added.

Alegre said the confidence index of Filipino consumers on the country’s economic condition turned negative for the next quarter and less positive for the next 12 months,

He added that the confidence index stayed positive for the family’s financial situation and income .

Furthermore, Alegre reported that business sentiment plummeted to 38.2 percent from 53.8 percent for the first quarter of 2024 and to 54 percent from 59.7 percent based on the Q4 2024 Business Expectations Survey (BES).

“The firms’ less upbeat outlook for the next quarter stemmed from their expectations of a decline in consumer spending typically following the holiday season, adverse effects of the Israel-Hamas conflict on supply chains, high inflation and rising interest rates,” Alegre said.