Consumer confidence turns positive – survey

MANILA, Philippines – Consumer confidence for the next 12 months finally turned positive after being in negative territory over the past seven quarters as the global economic recovery gains more foothold, a survey conducted by the Bangko Sentral ng Pilipinas (BSP) showed.

BSP Assistant Governor Cyd Tuano-Amador told reporters in a press conference that the Consumer Expectations Survey for the First Quarter of 2010 showed that the outlook for the next 12 months is more upbeat as the composite index turned positive at 5.1 percent after being in negative territory since the second quarter of 2008.

The consumer confidence composite index for the next 12 months turned negative in the second quarter of 2008 with -20.3 percent and worsened to -23.9 percent in the third quarter of 2008. The index steadily improved from -7.6 percent in the second quarter of 2009 to -0.8 percent in the fourth quarter of last year.

Amador said there was improved consumer confidence for all three indicators composed of economic condition of the country, family financial situation, and family income.

“More consumers expected that the economic condition of the country would be better and that this would bring about stable employment conditions, improved household finances and higher family savings,” she said.

The survey showed that the consumer outlook index on economic condition for the next 12 months improved to 1.1 percent from a negative -16.1 percent in the fourth quarter of 2009.

“Looking ahead to the next 12 months, consumers were bullish in their outlook on the country’s economic condition. For the first time since the start of the nationwide survey in the first quarter of 2007, the optimists outnumbered the pessimists, with the consumer index reverting to positive territory from negative 16.1 percent in the previous quarter,” Amador stressed.

The consumer outlook index on family financial situation improved to 4.4 percent in the first quarter survey from 0.7 percent in the fourth quarter survey while the index for family income declined to 9.9 percent from 12.9 percent.

However, Amador said the survey showed that the consumer confidence composite index for the current quarter remained in negative territory at -27.6 percent after being drowned by tropical storm Ondoy and typhoon Pepeng to -36 percent in the fourth quarter of last year.

For the next quarter, she added that the survey showed an improved consumer confidence composite index of -4.8 percent from -10.5 percent in the fourth quarter of last year as consumers were more optimistic that economic recovery is gaining more momentum and that the rebound could well result in improved household finances.

“However, optimistic respondents continued to be outnumbered by the pessimists as the confidence index remained in the negative territory,” she lamented.

The BSP official said the rise in consumer sentiment is in line with the trends observed in other countries such as Canada, Japan, United Kingdom, and Australia as the global economy emerges from the deepest contraction in post-war economic history.

Rosabel Guerrero, director of the BSP’s Department of Economic Statistics, said in a press conference that consumer confidence continued to rise in the first quarter of 2010, the next quarter, and the next 12 months.

“Consumer confidence rises in Q1 2010 and the next quarter, outlook is buoyant for the next 12 months,” Guerrero added.

She explained that more consumers expect better economic conditions over the course of the next 12 months while consumer sentiment across all income groups is more favorable.

She added that consumers expect inflation, unemployment, and interest rates to rise over the next 12 months.

The survey, according to her, also showed that consumers expect the peso to weaken against the dollar over the same period.

For his part, BSP Deputy Governor Diwa Guinigundo pointed out that Filipino consumers tend to be more pessimistic than business executives.

“People nomally are pessimists,” Guinigundo stressed.

He cited the recent result of the central bank’s Business Expectations Survey (BES) for the first quarter of 2010 that showed that confidence index rose sharply to a two-year high of 39.1 percent for the first quarter of the year from 22 percent in the fourth quarter of last year.

The business confidence index was the highest since the fourth quarter of 2007 when it reached 48 percent and has continued to increase for the third straight quarter after a negative growth of 23.9 percent in the first quarter of last year.

The Cabinet-level Development Budget Coordination Committee (DBCC) sees the country’s gross domestic product (GDP) growth between 2.6 percent and 3.6 percent this year from 0.9 percent last year while the BSP expects inflation kicking up to a range of 3.5 percent to 5.5 percent from 3.2 percent.

The CES that started in the first quarter of 2007 covered 5,496 households who responded to questions from February 10 to 21. –Lawrence Agcaoili (The Philippine Star)