Consumer pessimism remains in first quarter

FILIPINOS remain pessimistic in the first quarter as concerns over unemployment and low incomes outweighed the easing of inflation, according to a Bangko Sentral ng Pilipinas (BSP) survey.

In its Consumer Expectation Survey, the BSP said the overall consumer confidence index registered -25.7 percent in the first quarter, from -32.1 percent and -40.3 percent in the first and fourth quarters last year.

“Improved consumer confidence was partly due to lower prices of oil and other food items and positive news [that the] unfolding global financial crisis will not hit the Philippines as hard as other more advanced economies,” Iluminada Sicat, BSP Department of Economic Statistics head said in a briefing.

Sicat, however, said the number of pessimistic respondents is larger than that of respondents with a favorable outlook

The BSP projected inflation, or price increases, to decelerate this year to an average of 3.9 percent from 9.3 percent last year.

The Philippines’ gross domestic product (GDP) is expected to grow at a slower pace of 3.7 percent to 4.4 percent this year. A proxy for economic output, GDP is the amount of goods and services produced in a country.

Sicat said the optimists indicated improvement in household finances, lower personal debts, and improved employment of household members.

The pessimists, however, were concerned about low incomes, higher costs of agricultural inputs and rising household expenses.

More respondents also expect higher unemployment in the next 12 months with an index of 72.4 percent in the first quarter, up from 71.1 percent in the fourth quarter last year.

“The perception about the general economy is different with the perception of individual potential to be employed,” BSP Deputy Governor Diwa Guinigundo said.

The respondents also considered the first quarter as a favorable time to buy with an index of 17.5 percent, up from 15 percent in the fourth quarter but lower than the 20.4 percent in the first quarter last year.

Respondents indicated their intentions to buy consumer durables, motor vehicles, and house and lot, with an index of 7.5 percent.

Among the reasons cited by respondents were affordability, good investment options and the convenience of family members.

As a result, fewer respondents indicated higher expenditures on goods and services with an index of 40.7 percent, or 4.3 percent lower than the previous quarter, due to decelerating inflation.

The buying conditions for house and lots were highest at 24.8 percent in the first quarter up by 2.8 percentage points from the fourth quarter.

Guinigundo said the use of remittances has improved with a slight uptick in the savings index of overseas Filipino workers (OFWs) at 40 percent in the first quarter from 35.8 percent in the fourth quarter.

OFW use their remittances on food, education, medication, debt payments and other household expenses.

The survey was conducted from January 12 to 23 this year with a total sample size of 5,487 households.

About 55.5 percent of the respondents come from the low-income group, or those with less than P10,000 monthly family incomes, while 36 percent from the middle income group or those with monthly salaries of P10,000 to P29,000, and 8.4 percent from high-income groups or those with incomes of P30,000 and above a month. — Maricel E. Burgonio, Reporter, Manila Times