MANILA -Expectations of persistent high inflation and concerns about lower income dampened the optimism of businesses and households about their prospects in 2024, especially in the first quarter.
These are findings based on the latest quarterly survey of the Bangko Sentral ng Pilipinas among businesses, which was conducted last Oct. 5 to Oct. 14.
The Business Expectations Survey (BES) covered 1,548 firms drawn at random from the list of Top 7,000 Corporations ranked based on total assets in 2016 from the Bureau van Dijk database.
Meanwhile, the parallel Consumer Expectations Survey (CES) covered a random sample of 5,398 households across the Philippines. It was done last Oct. 2 to Oct. 13.
READ: PH businesses, households optimistic about Q4 prospects
Results show that the business optimism for the next quarter—in this case the first quarter of 2024—deteriorated as the confidence index receded to 38.2 percent from 53.8 percent in the previous survey done last July.
Weak consumer spending
Decreased optimism among businesses regarding the quarter ahead was attributed to expectations of a decline in consumer spending typically following the holiday season; adverse effects of the Israel-Hamas conflict on supply chains; high inflation; and rising interest rates.
Meanwhile, business confidence for the next 12 months was similarly less optimistic, with the index slipping down to 54 percent from 59.7 percent.
READ: Israel-Hamas conflict is ‘new cloud’ darkening economic outlook – IMF chief
The less favorable outlook for the next 12 months among enterprises was attributed primarily to their concerns about the negative effects of the Israel-Hamas and Ukraine-Russia conflicts on the economy, including higher oil prices; lower demand for goods and services; higher prices of basic goods; increasing interest rates; and higher costs of production and raw materials.
Among households, optimism about the next three months also declined to 5.6 percent from 7.8 percent in the previous survey.
Less buoyant
The consumer outlook for the next 12 months was similarly less buoyant, with the index down to 15 percent from 18.95 percent in the previous poll.
Households are expecting a faster increase in the prices of goods—higher inflation— lower income; and fewer available jobs.
READ: US consumer prices unchanged; core inflation slowing
Among households surveyed last October, the percentage of those with savings decreased to 29.1 percent compared to 32.8 percent in the July survey.
Among those who do have savings, they are setting aside money for emergencies; health and medical expenses; education; retirement; business capital and investment; and house purchase.