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MANILA, Philippines – Filipino consumers are more upbeat about the third quarter of 2016 than ever, according to the latest Bangko Sentral ng Pilipinas (BSP) Consumer Expectations Survey (CES).
The overall consumer Confidence Index (CI) for the third quarter turned positive and registered its highest reading at 2.5% from -6.4% in the second quarter of 2016.
This indicates that optimists outnumbered pessimists for the first time since the nationwide survey was first conducted in the first quarter of 2007, BSP Deputy Governor Diwa Guinigundo said on Friday, September 9.
The CI is computed as the percentage of households that answered affirmatively less the percentage of households that answered negatively on 3 indicators: condition of the economy, family financial situation, and family income.
Guinigundo noted that two of the indicators – condition of the economy and family financial situation – reached all-time highs, while family income remained steady.
“We were pleasantly surprised,” he said, adding that the positivity was due to the strong economic performance backed by sustained macroeconomic fundamentals.
Guinigundo also pointed to the assumption of office of President Rodrigo Duterte on June 30 as another factor. He noted that the President came in with a very popular mandate and earned a public trust rating of 91% as he began his term.
The Duterte administration’s high-profile campaign against drugs and the perceived improvement in the peace and order situation in the country also contributed to increased confidence, said Teresita Deveza, deputy director of the BSP’s Department of Economic Statistics (DES).
Deveza said the respondents also cited the availability of more jobs, stable prices of commodities, anticipated increase in salaries, and effective government policies, particularly state assistance through the Pantawid Pamilyang Pilipino Program or 4Ps.
Consumers’ positive sentiment for the third quarter reflects that of the country’s firms which have also turned bullish for the months ahead.
The renewed confidence extends beyond the third quarter as well, with the consumer CI increased to 27.3% from 5.6% for the fourth quarter and to 43.8% from 26.6% for the year ahead.
The main reasons behind this were that consumers expect improvements in the peace and order situation, availability of more jobs, salary increases, and that good governance would continue over the next 12 months, Deveza explained.
Respondents also anticipated that lower prices of goods, lesser household expenses, rising household income, and savings would translate to growth in real income and higher purchasing power.
The Q3 CES survey was conducted between July 1 and 12, over a month before the Davao City bombing and Duterte’s controversial remarks against US President Obama and the US, in general, which led to the cancellation of planned bilateral talks between the two leaders at the recent ASEAN Summit in Laos.
“The issue on the President’s rhetoric is something that market players may find to be amusing. But over time, the President will get used to his position but I think what is more important is the substance of what he is saying,” Guinigundo said.
He also said external developments, especially the timing of the US Federal Reserve rate hike and Brexit, would affect the volatility of Philippine markets but that increased spending would sustain economic momentum.
“We have both monetary and fiscal space. We have what it takes to see the continuity of better macrecoenomic fundamentals ahead,” Guinigundo said. – Rappler.com