Q1 consumer confidence eases; Q2 weakness seen

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Filipino households’ optimism about the Philippine economy eased slightly in the first quarter of 2017 from the preceding quarter, but sustained its turnaround from the pessimism that prevailed a year earlier, the latest Consumer Expectations Survey by the central bank shows.

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Respondents to the CES cited increased incomes, more jobs, and even improved peace-and-order situation in the country for their optimism in the January to March 2017 period.

The confidence index (CI)—computed as the percentage of those that answered in the affirmative, less the percentage of those that answered otherwise—eased to 8.7 percent for the first quarter of 2017 from 9.2 percent in the fourth quarter of 2016.

But the CI for the first quarter reversed a negative 5.7 percent index recorded in the corresponding period in 2016, results of the CES by the Bangko Sentral ng Pilipinas (BSP) released on Friday showed.

The index measures the average direction of change in three indicators: the 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, whereas a positive CI indicates the opposite.

“The current quarter’s relatively steady outlook stemmed from the counterbalancing of the number of respondents that reported more positive view on the economy versus those with negative views,” BSP Department of Economic Statistics Deputy Director Teresita Deveza said at a press conference following the release of the first-quarter CES.

Respondents with negative views noted higher prices of goods and household expenditures, poor harvest, and unfavorable weather conditions, Deveza said.

Meanwhile, respondents with positive views cited improvements in the peace-and-order situation in the country, additional family income on the back of higher salary and stronger business activity, availability of more jobs and increase in the number of employed family members, and effective government policies as reasons for their optimism.

“We have to emphasize here that the number of optimists continues to outnumber those pessimists during the survey in the first quarter,” BSP Deputy Governor Diwa Guinigundo said.

The nationwide survey—conducted from January 19 to 31—covered 5,574 households, of which 2,838 or 50.9 percent were from the National Capital Region (NCR) and 2,736 or 49.1 percent were from areas outside the NCR.

“The latest CES index still shows that domestic consumer confidence remains very high, buoyed by strong economic growth,” Rajiv Biswas, Asia-Pacific chief economist at IHS Markit, said.

Biswas said another positive factor behind the steady confidence index was the sustained expansion in remittances by Filipino workers abroad, accounting for about 10 percent of the Philippines’ gross domestic product (GDP), he added.

Losing luster

Moving forward, the latest survey also showed that the consumer confidence index declined to 16.5 percent in the second quarter and to 31.7 percent in the year ahead, from 18.8 percent and 33.4 percent, respectively, as seen in the previous quarter’s survey results.

“This indicates that the number of households with positive outlook decreased but continued to exceed those with negative views,” it said.

The less upbeat outlook for the next quarter and the year ahead emanated from households’ concerns about higher prices of goods, depreciation of the peso, poor harvest due to bad weather conditions, and a slowdown in business activity.

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