PH consumer confidence hits pandemic-era low
Consumer confidence fell to a pandemic-era low in the fourth quarter as a widening graft scandal exposed governance weaknesses and stalled public works, while businesses grew less optimistic about conditions in the months ahead, the Bangko Sentral ng Pilipinas (BSP) reported.
A quarterly central bank survey of about 5,000 households nationwide showed that the consumer confidence index (CI) worsened to -22.2 percent in the fourth quarter, from -9.8 percent in the preceding three months. A negative reading indicates that pessimists outnumber optimists.
The latest result was the weakest since the fourth quarter of 2021, when the index plunged to -24 percent during the height of the pandemic. Among the factors that dragged down household sentiment, the central bank said, was an ongoing corruption scandal that has implicated high-ranking government officials.
President Marcos’ economic team has already signaled that official macroeconomic targets may need to be revised to account for the fallout from an expanding antigraft drive, which dragged economic growth to a four-year low of 4 percent in the third quarter.
The probe has widened to include lawmakers, Cabinet members, government engineers and private contractors, undermining confidence and squeezing public spending at a time when the economy is increasingly reliant on domestic demand to cushion mounting global risks from trade uncertainty.
“Consumers were also concerned about the effective delivery of government services amid public discontent over governance-related issues,” the central bank said.
Interestingly, households cited higher inflation as a major concern, even though consumer price gains have remained below the central bank’s 2 to 4 percent target range for a ninth straight month in November.
Those expecting higher inflation pointed to worries over food and grocery prices, the effectiveness of government programs in curbing price pressures, inclement weather and other natural calamities and tighter supplies of basic commodities.
Looking ahead, the central bank said consumer sentiment was less upbeat in the next quarter, with the confidence index easing to 3.6 percent from 6.9 percent in the previous survey round as households grew more pessimistic about the broader economy and less bullish on family income.
Sentiment over the next 12 months also weakened, with the index slipping to 11.8 percent from 14.1 percent, as households turned more pessimistic about the country’s economic outlook, remained upbeat about their financial situation and grew more optimistic about income prospects.
Business confidence
Meanwhile, a separate BSP survey of 1,521 companies showed the CI for businesses improved to 29.7 percent in the fourth quarter, from 23.2 percent in the third, a more upbeat sentiment due to strong holiday season spending, business process enhancements, expansion plans and benign inflation.
But for the next quarter, the confidence index stayed positive but dropped to 23.7 percent from 49.5 percent before. Companies surveyed pointed to post-holiday decline in demand for products and services and business activities, negative impact of corruption allegations on investor confidence, peso depreciation and higher inflation.
The overall business outlook for the next 12 months was also less optimistic. The index slipped to 40.4 percent from 48.1 percent previously, with firms worrying about governance-related concerns about public works spending, weaker demand for products and services, higher inflation, peso depreciation and possible economic slowdown.
