Consumer confidence soars to four-year high

MANILA, Philippines — Consumer confidence in the next 12 months soared to its highest level in more than four years after dipping in the second quarter,  according to the results of the latest consumer expectations survey (CES) conducted by the Bangko Sentral ng Pilipinas (BSP).

Based on the Q1 2022 CES released Friday evening, the overall consumer outlook index for the next 12 months soared to 30.4 percent from the previous quarter’s 23.6 percent.

According to the BSP, the respondents attributed their brighter year-ahead outlook to expectations of more available jobs, additional and high income, good governance as well as higher salary.

For the second quarter, the central bank reported a dip in consumer confidence index to 6.4 percent from the previous quarter’s 9.3 percent, stemming from concerns about the faster increase in the prices of goods, low to no increase in income, and high unemployment rate.

Filipino consumer turned less pessimistic in the first quarter  with the overall confidence index improving to -15.1 percent from -24 percent in the previous quarter due to the availability of more jobs and permanent employment as well as additional and high income.

“The sentiment improved in Q1 2022 as a less pessimistic outlook was observed across the three component indicators of consumer sentiment, namely, country’s economic condition, family’s financial situation, and family income,” it said.

The respondents also cited the effective government policies and programs, such as the easing of COVID-19 quarantine restrictions, availability and rollout of vaccines, and provision of financial assistance.

“The higher confidence index, albeit remaining negative, indicated that the number of households with optimistic views increased, but was still lower than those with pessimistic views,” the central bank said.

The BSP  explained that the sentiment of consumers in the Philippines was comparable to the less pessimistic outlook of consumers in Turkey.

Meanwhile, consumer outlook in Czech Republic, euro area, France, Israel, Japan, Netherlands, Poland, Thailand, United Kingdom and the US were more pessimistic, while consumer sentiment in Australia, Canada, Finland and Switzerland turned negative.

After exiting the pandemic-induced recession with a gross domestic product (GDP) growth of 5.7 percent last year, the Philippines managed to sustain the rebound with a stronger-than-expected expansion of 8.3 percent in the first quarter  as quarantine and lockdown protocols were eased to Alert Level 1 in March.

The country slipped into recession as the GDP shrank by 9.6 percent in 2020 with the economy stalling due to the strict COVID-19 quarantine and lockdown protocols.

Economic managers see a faster GDP expansion of seven to eight percent this year and six to seven percent starting next year.

However, Filipinos are wary about the faster increase in prices with inflation quickening to 4.9 percent in April from four percent in March, exceeding the BSP’s two to four percent target due to soaring oil and commodity prices amid the ongoing Russia-Ukraine war.

The BSP raised its inflation forecasts to 4.6 instead of 4.3 percent this year and expects inflation to breach five percent in May. For 2023, it also raised its projection to 3.9 instead of 3.6 percent.

To curb rising inflationary pressures and prevent further build up of secondary effects, the central bank’s Monetary Board started its interest rate liftoff by raising key policy rates by 25 basis points last May 19.

Outgoing BSP Governor and Monetary Board chairman Benjamin Diokno hinted of a follow up rate hike of another 25 basis points.