Filipino households showed strong optimism for the third quarter of 2016 after the entrance of the administration of President Rodrigo Duterte, lifting consumer sentiment to positive territory for the first time in the nine years consumer confidence has been measured, according to the latest Consumer Expectations Survey (CES) by the Bangko Sentral ng Pilipinas (BSP).
The survey’s confidence index (CI) — computed as the percentage of those that answered in the affirmative less the percentage of those that answered otherwise — rose to its first positive tally of 2.5 percent for the third quarter of 2016, higher than the -6.4 percent in the second quarter, and the -11.6 percent in the third quarter of 2015.
Teresita B. Deveza, deputy director for BSP’s Department of Economic Statistics, said this is the first-ever positive CI record since the survey started in 2007. The first CI had a -33.3 percent turnout for the first quarter of 2007.
The overall consumer CI measures the average direction of change in three indicators—overall condition of the economy, household finances, and household income. A positive CI indicates a favorable view with regard to a given indicator, except for inflation, interest rates, unemployment and change in prices, where a positive CI indicates the opposite.
“Consumer confidence hit an all-time high. For the first time in nine years, it crossed into positive territory. Optimists outnumbered pessimists for the first time since the nationwide survey started in the first quarter of 2007,” Deveza said.
“The very first reason is the improvement in the peace and order situation, then the availability of more jobs, the stable prices of commodities, anticipated increase in salaries, effective government policies, assumption into office of the new administration as well as its pronounced campaign against drugs, and assistance from the government such as the Pantawid Pamilyang Pilipino Program (4Ps),” she added.
The nationwide survey — conducted from July 1 to 16 — covered 5,810 households — 3,002 or 51.7 percent of which were from the National Capital Region (NCR) and 2,808 or 48.3 percent were from areas outside the NCR.
Moving forward, Filipino consumers continue to be bullish, with the index surging to 27.3 percent for the fourth quarter of 2016 from 5.6 percent a quarter ago. For the next 12 months, the CI leapt to 43.8 percent from 26.6 percent in the previous quarter’s survey.
“Consumers anticipated that improvements in the peace and order situation, availability of more jobs, salary increases, and good governance would continue over the next 12 months,” Deveza said.
Aside from these factors, the study said that consumers also expected possible decreases in prices of goods, lower household expenses, as well as an increase in household income and savings that could translate to growth in real income and higher purchasing power of the household.
Based on the three components by which consumer sentiment is measured, the latest survey found that in third quarter 2016, consumers are confident in the economy and family finances, improving to 9.5 percent and -2.2 percent since 2007, respectively. Family income, on the other hand, was steady at 0.2 percent.
The high-income group — households earning P30,000 or more monthly — registered the highest CI of 25.4 percent. Those in the middle-income group — P10,000 to P29,000 per month — recorded 10.3 percent CI, while the low-income segment — less than P10,000 per month — posted a negative CI of -5.5 percent.
Optimism on Duterte
For his part, BSP Deputy Governor Diwa Guinigundo said consumers remain positive and are indeed showing much optimism in the new administration, despite the recent “rhetorics” made by President Rodrigo Duterte.
“I guess between that and external threats like the US Fed moves or the continuing softness of global economic growth such as the impact of Brexit, for example, those are the more significant threats,” Guinigundo said.
“The issue on the President’s rhetorics, I think it’s something the market players find to be amusing. Over time, the President will get used to this position. What is important is the substance of what he’s saying,” the BSP officials said.
“As long as the economy is doing well, and it’s expected to continue given the 10 point program of the President, the serious intention to spend more, and help sustain the growth momentum both in monetary in fiscal space, then I think we have what it takes to see the continuity of better macro fundamentals ahead. Those rhetorics will be sidelined compared with the assessment of the content of what he’s saying,” he added.