Declining consumer confidence for Philippine economy in Q3

Lower consumer confidence in Q3

According to the Bangko Sentral ng Pilipinas (BSP), the Central Bank of the Philippines, despite the overall consumer confidence index recording a positive, consumer confidence for Philippine economy in the third quarter declined from 13.1 percent in Q2 to 10.2 percent in Q3.

Despite this decrease, the consumer confidence level for Q3 is recorded as the second highest since the establishment of the survey in 2017. According to Rosabel Guerrero, director of the Department of Economic Statistics (DES) in BSP, this change depicts that although optimistic Filipino consumers are declining, the number of optimistic consumers still exceeds pessimistic consumers.

The consumer confidence index survey calculates its value through several indicators, such as the condition in Philippine economy, family financial standing, and family income. From these indicators, BSP found various reasons that contributed to the decline in consumer confidence for Q3. These are, but not limited to:

1)   Political instability derived from the situation in Marawi City

2)   Problems arising due to the Avian flu threat

3)   Expected higher commodities prices

4)   Expected rise in unemployment

5)   Stable income (low or no increase)

Philippine economy on positive track

Despite consumer confidence slipping in the third quarter, Philippine economy in Q2 has continued to expand greater than six percent for the eight consecutive quarter. Compared to last year’s Q2 GDP, this year’s Philippines GDP in the second quarter has rose by 6.5 percent.

With strong domestic demand and infrastructure investments being planned and made by President Rodrigo Duterte, this has allowed the continuing of positive Philippines economic growth trend. Even though investment growth saw a decline in Q2 at 8.7 percent, according to Socioeconomic Planning Secretary Ernesto Pernia, Q2 saw a sharp increase in government spending by 7.1 percent, from 0.1 percent in Q1. The increase in household consumption at 5.9 percent, exports at nearly 14 percent (January to June), and government spending has contributed to the steady increase of Philippine economy GDP for 2017.

Consumer confidence index outlook for Q4

Despite the drop in Q3, according to the survey for Q4, consumer confidence index for Q4 increased to 17.8 percent. According to Guerrero, with people expecting higher income, political stability and higher jobs availability, this has induced higher consumer confidence for the fourth quarter.

With the values in the survey reflecting local economic indicators, such as Philippines GDP, inflation, and Philippines economic growth, positive growth are expected for Philippines GDP in Q4 as consumer confidence for Q4 increases.