By Lee C. Chipongian
The central bank said yesterday its latest survey of both the business and consumer sentiments showed an improved level of confidence in the economy and financial conditions not only in the first quarter but in the year ahead.
BSP Deputy Governor Diwa C. Guinigundo. (MANILA BULLETIN )
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said yesterday that there is “more optimistic sentiment for both business respondents and consumer respondents” with additional/high income, as well as perceived improvement in the peace and order, more jobs to be found and good governance.
For the Consumer Expectations Survey (CES) in particular, Guinigundo said the survey had a significant improvement as the overall confidence index (CI) increased to -0.5 percent versus -22.5 percent in the last quarter of 2018.
“This is a big, big improvement. In fact this was the largest quarter-on-quarter increase since the start of CES since the first quarter of 2007 (when the survey started),” he said during the survey briefing.
The Business Expectations Survey (BES) which was reported alongside the CES – when normally the BSP reports these two surveys separately – also improved for the first quarter a CI of 35.2 percent from 27.2 percent in the last survey in 2018 and this was after it decreased for four quarters in a row previously.
Guinigundo said the BES outlook improved because of more business activities ahead of the mid-term election period in May which encouraged positive sentiments among businessmen. Other factors for the optimism are: increased orders and consumer purchases with the easing of inflation; higher government infrastructure spending with the “Build, Build, Build” strategy of the current administration; introduction of new and enhanced business strategies and processes; and expansion of businesses and new product lines.
In the BES report, businessmen were also optimistic in their business operations which “would benefit from the favorable macroeconomic
conditions in the country, particularly lower inflation and interest rates.”
The BES also indicated that they were more bullish for the second quarter as the CI rose to 52 percent from 29.4 percent in the previous quarter. This next quarter reading is the highest since the fourth quarter of 2016.
The more bullish outlook was due to: usual increase in demand during summer (in view of the foreseen increase in the number of local and foreign tourists), enrollment and harvest periods; election-related spending in the run-up to the elections in May 2019; sustained increase in orders and projects leading to higher volume of production; and more construction activities (public and private) during the dry season.
The BES was conducted January 22 to March 19, and involved 1,496 firms. The CES, in the meantime, was done during the period of February 5 to 16 with a sample size of 5,562 households.
The CES indicated improved outlook in the first quarter and in the next three quarters.
“The improved consumer confidence for the first quarter 2019 was observed across the three component indicators of consumer confidence, namely, the country’s economic condition, family financial situation, and family income. Notably, the CIs for economic condition and family income posted the largest positive changes in their respective index levels since the first quarter of 2007. Likewise, for the next quarter and the year ahead, consumer confidence, as measured by the three component indicators, improved,” reported the BSP.
In particular, the next quarter CIs for economic condition and family financial situation reverted to positive territory and the year ahead CIs for family financial situation and family income registered the biggest upsurge since the start of the nationwide survey, said the BSP.