After long bout with pessimism, consumers now optimistic—poll

Consumers have become optimists since President Duterte assumed office, after long bout with pessimism, a Bangko Sentral ng Pilipinas (BSP) survey conducted from July 1 to 12 showed. 

The confidence index (CI) in the BSP survey for the third quarter of 2016 rebounded to 2.5 percent, which was the first time the index ended in positive territory since the survey was first held in 2007.

Results of the Consumer Expectations Survey (CES) for the third quarter this year showed that over-all outlook made a turn-around from a negative 6.4 percent in the previous quarter and year-ago’s negative 11.6 percent.

Respondents attributed this development to improvements in the country’s peace and order situation, availability of more jobs, stable commodity prices, expected increase in salaries, effective government policies, assumption into office of the Duterte administration, which has launched an all-out bid to address the drug menace; and the government’s aid programs such as the Pantawid Pamilyang Pilipino Program (4Ps).

Duterte won by a landslide in the May 9 polls after he received more than 16.5 million votes, over 6 million higher than the next candidate, former Interior Secretary Mar Roxas.

BSP Deputy Governor Diwa Guinigundo said the results of the third-quarter 2016 CES showed that a broad increase in outlook was noticed among the three income groups.

The bulk of the respondents at 46.9 percent came from the low-income group, or those with monthly income of less than P10,000.

It was followed by the middle-income group or those with monthly income of P10,000 to P29,999 at 38.8 percent and those from high-income group, P30,000 and over, at 14.2 percent.

The highest quarter-on-quarter change in the over-all outlook was registered by those from the low-income group even as the index remains in the negative.

Low-income group index for the third quarter this year stood at negative 5.5 percent, as against the negative 17.2 percent in the second quarter, a jump of 11.7 percentage points.

Those from middle-income group registered an 8.1 percentage points increase to 10.3 percent from quarter-ago’s 2.2 percent.

A 7.2-percentage points increase was posted for the high-income group after the index improved to 25.4 percent from 18.2 percent in the previous quarter.

Guinigundo attributed the broad improvement in the respondents’ outlook to a combination of momentum of the current administration as well as economic gains in the past years.

“It’s a continuing pattern of macroeconomic improvements and this was carried over to the third quarter of 2016,” he said.

”On top of that, you have a President who enjoys at least a 5-million majority vote over the next candidate so he came in with a very popular mandate. And in the first month of assumption of office he had a 91- percent acceptance rate, so it all adds up basically,” he said.

Asked whether the central bank official considers this momentum to be carried over in the next CES, Guinigundo said this is hard to predict.

He also pointed out that monetary officials consider external economic factors such as the next increase in the Federal Reserve and the global economic growth as more important factors that will impact on the domestic economy.

“I think (these) are the more significant threats, which could affect the market volatility in the Philippines,” he said.

Guinigundo said the issue about the President’s rhetorics “is something that, in fact, market players find amusing.”

“But what I think is more important is the substance of what he’s saying. There are different ways of saying things but what is important to me is the substance,” he said.

The central bank official also noted that as long as the economy is doing well “it’s expected to continue doing well, given the 10-point program of the President,” referring to the goal to improve the past administration’s economic program, introduce tax reforms, increase infrastructure spending and improve social-protection programs, among other things.

“We have both the monetary and fiscal space. I think we have what it takes to see the continuity of better macroeconomic fundamentals.

Those rhetorics, I think, will be sidelined in favor of more careful and more circumspect assessment of the content of what the President is saying,” he added. LUIS LEONCIO