CONSUMER CONFIDENCE REMAINS NEGATIVE
MANILA, DECEMBER 14, 2008 (STAR) By Des Ferriols Updated - Consumer confidence remains negative for the fourth quarter of the year and the first quarter of 2009, but some improvement was noted as global oil prices continued to decline.
The quarterly Consumer Expectations Survey (CES) of the Bangko Sentral ng Pilipinas (BSP) showed the grim outlook of the consuming public on the country’s economy, their own finances and family income.
But the BSP said the CES results indicated a slight improvement in the overall confidence index with the number of pessimistic households dropping slightly because they anticipate lower prices in fuel, food and other goods.
The BSP reported yesterday that when asked about their outlook for the fourth quarter of 2008 and the first quarter of 2009, consumers in 5,448 households nationwide were decidedly bearish, with the Confidence Index at negative 40.3 percent.
Although still grim, this was an improvement from the index level in the previous quarter, which was recorded at negative 52.8 percent, the lowest level since the survey went national in 2007.
The BSP said there was some pick-up in sentiments towards the fourth quarter – not surprising since spending normally goes up during the holiday season when people have more money to spend.
The outlook for the first quarter of 2009 was also at negative 11.2 percent but the BSP said the number of households who expected better conditions in 2009 actually increased.
According to the BSP, the survey was conducted following the onset of the global financial crisis, which indicated that the households surveyed already knew of the imminent economic slowdown in 2008 and 2009.
According to the CES results, consumers were most pessimistic about their outlook on the country’s economic condition with the consumer confidence index taking the deepest fall at negative 69.9 percent. The index on family income was at negative 15.8 percent and the index on family financial situation at negative 30 percent.
The three indices, however, were better than the indices recorded by the BSP when consumers were surveyed about their third quarter outlook.
The BSP said consumers were most concerned about rising prices of fuel and basic commodities, the anticipated increase in the number of the unemployed, and reduced household income.
The CES results confirmed that consumers from the high-income group remained broadly optimistic about their family income in the fourth quarter, although the number of optimistic respondents from this group contracted as the family income index declined.
Meanwhile, the confidence of low and middle-income households slumped further with the continuing rise in the prices of basic goods and services. These income groups represented 57 percent and 33.8 percent of all respondents, respectively.
The BSP said that against the expected increase in prices, consumers anticipated that expenditures on basic goods and services would increase for the quarter.
Households expected an acceleration of expenditures particularly on food, transportation and fuel – items which have recently registered sharp price movements.
“It’s human nature to be relatively more optimistic during the holidays,” said central bank Deputy Governor Diwa Guinigundo. “But consumers are also reacting to the decline in the prices of transportation, fuel and food, mainly rice.”
The BSP said survey results indicated that more households nationwide expected their average expenditures on basic goods and services to go up in the first quarter of 2009, although the number of those who said that their expenditures would rise was smaller relative to the previous quarter’s survey.
“The decline in the expenditures index by 12.0 index points quarter-on-quarter may be partly explained by the reduction in the prices of some basic goods and services particularly fuel, rice, and transportation,” the survey said.
Respondents nationwide indicated that their expenditures on the following goods and services would increase in Q1 2009: food (the index at 68.9 percent), transportation (52.2 percent), electricity (47.5 percent), personal care and effects (47.1 percent), medical care (44.7 percent), and fuel (43.1 percent). Diokno: Worst ahead of us The “economic storm” raging across the world has gradually made landfall in the Philippines, wreaking havoc in exports growth, triggering massive unemployment, and sharply pulling foreign direct investments in the country, a former Cabinet member and economic professor at the University of the Philippines said yesterday.
Former budget secretary Benjamin Diokno told reporters during the weekly Kapihan sa Sulo news forum that as a result of the economic crisis, exports growth from January to October slowed to 1.9 percent against the annual growth of 11 percent. From October, he added that exports contracted by 14 percent, the weakest monthly export performance since December 2001.
“It’s wrong to say the economic storm is coming. It has arrived and the worst is ahead of us,” Diokno warned.
He said forecast growth is expected to worsen next year – most likely flat or zero growth but a negative growth cannot be ruled out. The economies of the Top 10 destinations of Philippine exports, which account for about 85 percent of the total exports, are expected to worsen by 2009 and in an optimistic scenario, these economies will recover weakly by 2010.
Diokno predicted that the Philippine economy would virtually come to a standstill, as people who are losing jobs stop spending, investors cease to pour in money and banks stop lending cash.
He said to combat the crisis the government must initiate massive spending on restoration of infrastructure to generate employment and stimulate the economy.
The former budget chief s The former budget chief sees the unemployment rate worsening in the months to come both here and abroad. As of April this year, there were some 9.5 million Filipinos who are unemployed or under-employed. – Perseus Echeminada
Chief News Editor: Sol Jose Vanzi
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