Pandemic smashes consumer, business confidence in third quarter

MANILA, Philippines — Consumer confidence sank to historic low in the third quarter while business sentiment likewise took a heavy beating, posing a big challenge to the government relying on its citizens to rebound from an unprecedented economic damage caused by the pandemic.

A poll of 5,563 households released by the Bangko Sentral ng Pilipinas (BSP) on Thursday showed the country's consumer confidence index crashed to -54.5% in the July-September period, the worst since the central bank started the nationwide poll in 2007. Readings across income groups hit record-lows during the third quarter, data showed.

On the other hand, a separate BSP poll of 1,517 firms nationwide showed the business confidence index sagged to -5.3% in the third quarter, snapping 43 quarters of positive confidence amid weak sentiment across sectors.

A negative reading means pessimists outnumbered the optimists during the period.  Had the BSP not suspended its survey due to movement restrictions, the quarterly poll would have captured the massive impact of the pandemic on both business and consumer confidence during the second quarter, the height of Luzon lockdown.

"The BSP believes that these surveys are valuable tools not only for shaping monetary and financial system policies, but also socio-economic policies," Governor Benjamin Diokno said in a statement.

"This is particularly true amid whole-of-nation efforts to address the impact of the COVID-19 pandemic,” Diokno added.

According to the BSP, both businesses and consumers attributed their gloomy sentiment to the coronavirus pandemic, which threw millions of Filipinos into unemployment and dragged the economy into recession.

Going forward, consumers will enter the last three months of 2020 with bleak outlook after the index plunged to -4.1%. To make matters worse, household spending outlook deteriorated to a record-low of 26.4% for the fourth quarter, indicating that consumer spending will likely contract at a time consumption was typically high during holiday season.

However, respondents said they are more bullish in the next 12 months, with the reading jumping to 25.5%. "The consumer outlook was more upbeat for the next 12 months particularly due to expectations of an end in the COVID-19 pandemic or return to normal," the BSP said.

Meanwhile, companies are less buoyant for the next quarter after the index dropped to a reading of 16.8%. The sour business outlook is expected to persist in the next 12 months, with the index declining to 37.5%.

Amid a revenue drought due to depressed demand, the country's employment outlook both dived into the negative territory for the fourth quarter and next year, figures showed, suggesting that more businesses may retrench workers in the near-term.