Business, consumer sentiments slump

MANILA, Philippines — Consumer and business sentiments slumped to their lowest levels in the third quarter as the country slipped into recession due to the COVID-19 pandemic, the Bangko Sentral ng Pilipinas (BSP) said yesterday.

In a virtual press conference, BSP Governor Benjamin Diokno said the results of the Consumer Expectations Survey (CES) and Business Expectations Survey (BES) for the third quarter showed a sharp drop in confidence for both Filipino consumers and businesses.

“The pessimism of consumers and businesses in the third quarter is expected due to the COVID-19 pandemic,” Diokno said.

The conduct of CES and BES was called off in the second quarter as Luzon was placed under enhanced community quarantine to slow the spread of the virus.

Diokno said the consumer confidence index slumped to -54.5 percent in the third quarter, the lowest level since the CES was started in 2007.

The consumer confidence index stood at 1.3 percent in the first quarter.

On the other hand, Diokno said the business confidence index slipped into negative territory at -5.3 percent in the third quarter from 22.3 percent in the first quarter, ending 43 straight quarters of positive business confidence index.

This was the lowest since the first quarter of 2009 when the business confidence index slumped at -23.9 percent.

Diokno said the BES was conducted from July 8 to Sept. 10, covering 1,517 firms, while the CES was conducted from July 1 to 14 with more than 5,400 responding households.

The survey was resumed in the third quarter after being cancelled in the second quarter due to its importance in policy decision-making.

“The BSP believes that these surveys are valuable tools not only for shaping monetary and financial system policies, but also socioeconomic policies. This is particularly true amid whole-of-nation efforts to address the impact of the COVID-19 pandemic,” Diokno said.

The BES and CES provide advance information on the overall outlook of businesses and consumers on the economy for the current quarter, next quarter and the next 12 months.

Redentor Paolo Alegre, director of the BSP’s Department of Economic Statistics (DES), told reporters that the pessimism of consumers was caused by the COVID-19 pandemic, the high unemployment rate and less working family members, the low and reduced income, as well as the faster increase in the prices of goods.

Alegre said the consumer confidence index also moved into the negative territory at -4.1 percent for the fourth quarter from 9.2 percent in the first quarter, but consumers are more upbeat for the next 12 months with a confidence index of 25.5 percent in the third quarter from 19.9 percent in the first quarter.

He said the global health crisis and mobility restrictions, the decrease in orders, sales and income, slowdown or temporary shutdown in operations and fewer customer traffic as well as concerns over government policies also dragged the sentiment of business enterprises.

For the fourth quarter, businesses are less optimistic at 16.8 percent from 42.3 percent in the first quarter .

BSP Assistant Governor Iluminada Sicat said the worst is over for the economy in the second quarter as advance indicators such as purchasing managers index (PMI), monthly integrated survey of selected industries (MISSI), foreign direct investments (FDIs), and remittances from overseas Filipino workers (OFWs) are showing some recovery in recent months.

“We’ve seen some recovery in the numbers. There’s still some contraction in terms of output, in terms of potential output for the third quarter, but the contraction has been declining,” Sicat said.

Sicat said there could be some improvements in the third quarter GDP. “We’ve seen a gradual reopening of economies, as well as our own domestic restrictions have been eased. So we are expecting some improvement for the third quarter.”