Consumers turned more pessimistic in the second quarter of the year, falling off the high provided by cheap fuel, and spooked by the peace and order concerns in Mindanao as well as the perception of rampant corruption in the government.
Results of the nationwide Bangko Sentral ng Pilipinas’ Consumer Expectations Survey (CES) showed pessimistic households outnumbered optimists. Most families were wary of rising commodity prices and were concerned about the strength of the economy.
Despite the pessimism, the BSP noted a rise in the number of families preparing for big purchases such as homes, cars, or appliances—likely caused by people wanting to make major investments before conditions sour.
This increase, the BSP said, might mean consumer spending would remain strong in the current quarter, helping keep Philippine gross domestic product (GDP) growth healthy.
“It’s possible they’re also hedging. One of the reasons they cited for bearishness is high prices. But if they buy now, especially big ticket items, they can realize some savings,” Guinigundo said in a press conference.
The second quarter survey noted a rise in pessimists, pushing down the nationwide confidence index to -16.2 percent from -10 percent in the first quarter. The index is the difference between the proportion of pessimists and optimists.
Conducted in the first two weeks of April, the survey focused on four major areas—the National Capital Region, Luzon as a whole, Visayas and Mindanao. More than 6,100 households were covered by the survey.
Anticipation for higher prices of commodities due to increase in domestic oil prices, power rate hikes and higher tuition, contributed to the bearish outlook. Households also cited an expected increase in the number of unemployed persons as new graduates enter the labor force, and perceived graft and corruption in the government.
Respondents also cited their concerns about the peace and order situation in the country following the death of 44 members of the Special Action Force (SAF 44) and the political issues behind it, the occurrence of calamities such as fire, typhoons, and lastly the impact of the El Niño dry spell on agricultural output.
The survey results offered a glimmer of hope. The percentage of households that considered the current quarter as a favorable time to buy big-ticket items increased to 30.3 percent (from 28.4 percent in the first quarter).
The more favorable outlook on buying conditions was due primarily to the improved outlook on buying conditions for real estate, the BSP said.
Guinigundo said the relationship between the big-ticket buying outlook in the CES and the consumer spending component in the National Income Accounts was “statistically significant.” Consumer spending accounts for two-thirds of the country’s GDP.