MANILA - The COVID-19 pandemic has caused Filipino consumers and businesses to become very pessimistic in the third quarter of the year, according to the results of the Bangko Sentral ng Pilipinas.
The BSP Consumer Expectations Survey (CES) showed the consumer confidence index plunging to a record low of minus-54.5 percent in the third quarter, which was the lowest since the start of the nationwide survey in the first quarter of 2007.
Business confidence in the economy also turned negative in the third quarter, after posting 43 quarters of positive confidence, as the overall business confidence index fell to minus-5.3 percent, the BSP said. This was in contrast to the 22.3 percent confidence index in the first quarter of the year.
Respondents to the consumer survey said they were pessimistic because of the COVID-19 pandemic, high unemployment rate and fewer working family members, low and reduced income, and faster increase in the prices of goods.
Citing the same reasons, consumers said they remained pessimistic for the fourth quarter, with the CI at minus-4.1 percent. Consumers also don’t expect to spend much in the fourth quarter.
“The households’ spending outlook index on basic goods and services declined to 26.4 percent for Q4 2020, the lowest CI recorded since Q1 2007, indicating a contraction in consumer spending in the next 3 months,” the BSP said.
Business owners were pessimistic in the third quarter citing the impacts of the pandemic and community quarantine restrictions.
They also cited the decrease in orders, sales and income, slowdown or temporary shutdown in business operations, and concerns over government policies, primarily on the perceived insufficient mitigation measures to counter the impact of COVID-19.
Businesses are not upbeat either for the fourth quarter, with the business CI declining to 16.8 percent from 42.3 percent in the first quarter, the BSP said.
The gloomy outlook was due to expectations of the continuing negative effects of the COVID-19 pandemic affecting the volume of orders, sales, and income, and overall economic activity, in general.
The business outlook on the country’s economy was positive but still less upbeat for the next 12 months as the CI declined to 37.5 percent from 55.8 percent in the first-quarter survey.
The employment outlook was also negative for the fourth quarter and the next 12 months, suggesting that more firms may lay off workers in the coming months.
Consumers were more optimistic for the next 12 months as the consumer CI increased to 25.5 percent from the Q1 2020 survey result of 19.9 percent for the next 12 months.
The more upbeat consumer outlook was for the next 12 months from August this year to July next year was due to expectations of an end in the COVID-19 pandemic or return to normal as well as their anticipation that more jobs will become available, incomes will rise, and prices of goods will stabilize.
“The results of CES show they are pessimistic for Q3 and Q4 but are optimistic for next year over the end of the pandemic and return to normalcy. The weak business sentiment was associated mainly with the continuing negative effects of COVID-19,” said BSP Governor Benjamin Diokno.
“However once a safe vaccine is developed, business sentiment should improve," he added.
The government expects the Philippine economy to contract by 5.5 percent this year, before rebounding to a growth of 6.5 to 7.5 percent in 2021.
"It won’t rebound significantly without considerable improvement in consumer and business sentiment, hence the positive sentiment of business and consumers support optimism for 2021.”
- With a report from Warren de Guzman, ABS-CBN News