Improved consumer confidence augurs well for business, the economy

The latest Quarterly Consumer Expectation Survey conducted nationwide by the Bangko Sentral ng Pilipinas (BSP) showed that the outlook of consumers on their household financial situation and the economy’s performance has been steadily on the rise.

The survey revealed that the Confidence Index (CI) of consumers stood at -14.7 per cent, improving from the -20.6 per cent recorded a quarter ago and the -23.1 per cent reckoned a year ago.

The CI is the difference between the percentage of respondent households that are optimistic against those that are pessimistic.

According to the BSP, consumers’ sentiment has a positive correlation with the growth of the economy.  A more optimistic outlook signals a potential rise in household spending that could have fueled a faster growth of the economy during a given period.

The respondents cited the following reasons for the improved sentiment:  availability of more jobs that increased the number of employed family members, higher salaries of employed family members, perceived improvement in public governance, inflow of foreign investments in the country and the appreciation of the Philippine peso.

The CI has always registered negatively since the BSP began conducting the survey in 2004.  According to BSP, this is because Filipino consumers tend to underestimate their actual income situation and at the same time to be pessimistic about the economy.  The recent surveys show negative sentiment is easing and taking a more positive turn.

A similar survey among local businessmen conducted by the BSP in January and February showed a parallel improvement in confidence level of the business sector.  The confidence index picked up to 40.5 per cent from the 38.7 per cent recorded in October to December 2011.  Businessmen cited increased orders, new contracts and projects, enhanced business strategies and products, higher government spending, business expansion due to steady investment inflows, sound macroeconomic fundamentals and political stability as reasons for their bullish outlook.

Adapted from “BSP: Consumer sentiment improved in 1st quarter,” Philippine Daily Inquirer, March 30, 2012

 

 

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