Consumer confidence highest in 3 years

MANILA, Philippines – Consumer confidence hit a new record high under the Aquino administration on the back of favorable macroeconomic fundamentals as well as brighter economic prospects, results of a survey conducted by the Bangko Sentral ng Pilipinas (BSP) showed.

“While still in negative territory, the confidence index increased from -28.7 percent in the second quarter of 2010 to -14 percent, the highest reading since the nationwide survey started in 2007,” BSP Assistant Governor Ma. Cyd Tuano-Amador said, referring to the results of the 3rd Quarter Consumer Expectations Survey.

Data showed that the new record eclipsed the -23.6 percent recorded in the third quarter of 2007.

Amador said respondents of the survey cited the country’s sound macroeconomic fundamentals that were seen to translate to better employment and business opportunities.

“Consumers expect that more favorable macroeconomic conditions would generate better employment and business opportunities, resulting in improved family finances and higher family income,” she added.

She said survey respondents also cited expectations of good governance as another major reason for their favorable outlook.

Latest data showed that the country posted a surprising gross domestic product (GDP) growth of 7.9 percent in the first half of the year from 1.2 percent in the same period last year.

The country’s GDP expanded by 7.9 percent in the second quarter of the year from 7.8 percent in the same period last year.

“With consumer spending about 70 percent of GDP, the record high consumer confidence boosted expectations of a more robust economy moving forward,” Amador said.

The Cabinet-level Development Budget Coordination Committee (DBCC) sees the country’s GDP growing by 5.0 percent to 6.0 percent instead of 2.6 percent to 3.6 percent this year, from 1.1 percent last year.

The central bank’s Department of Economic Statistics (DES) director Rosabel Guerrero said the expectations of Filipino consumers followed the trends observed in other countries such as India, Indonesia, Singapore, China, and Vietnam as the global economy recovers and as concerns over the sovereign debt crisis in Europe have dissipated.

Guerrero said the consumer confidence index for the next three months also hit a new all-time high of 15.3 percent from -1.8 percent in the second quarter, while that of the next 12 months also hit a record level of 44.3 percent from 22.9 percent.

“For the next three months, consumer confidence reversed to positive territory after 11 consecutive quarters of recording a negative index… They (consumers) are equally confident that this upbeat sentiment will be carried over the next 12 months,” she added.

The survey showed that while Filipinos expect to spend more on basic goods and services in the fourth quarter, the number of respondents anticipating higher expenditures declined in the third quarter compared to the previous quarter.

“This development could be driven by the respondents’ expectations of subdued inflation over the course of the next 12 months,” Guerrero said.

Last Aug. 26, BSP’s Monetary Board decided to maintain this year’s inflation forecast at 4.0 percent but raised next year’s forecast to 3.25 percent instead of 3.0 percent due to the continued higher-than-anticipated economic growth in the first half, higher oil prices, petitions for electricity rate hike, the imposition of the 12 percent value added tax on toll as well as the impending MRT-LRT fare hike.

For 2012, the BSP sees inflation averaging 2.97 percent.

The BSP has set an inflation target of 3.5 percent to 5.5 percent this year and 3.0 percent to 5.0 percent between 2011 and 2014.

Guerrero said the survey showed that the employment situation was anticipated to improve in the next 12 months.

In the same period, inflation and interest rates are seen to go down.

She cited the sharp drop in the unemployment rate index to 7.9 percent in the third quarter of the year, from 52.4 percent in the second quarter.

She said Filipinos believe that the unemployment rate would decline considerably in the next 12 months.

She added that respondents also believed that the peso would continue to strengthen against the US dollar in the year ahead, in line with the expectations of robust overseas Filipino workers remittances, business process outsourcing receipts, and merchandise export revenues.

The survey, conducted from July 1 to 15, had 5,774 respondents. –Lawrence Agcaoili (The Philippine Star)