Businesses less optimistic, consumers more upbeat in Q3 — BSP

The business sector was less optimistic about the Philippine economy, while consumer confidence improved in the third quarter of 2023, the latest Bangko Sentral ng Pilipinas (BSP) surveys showed.

According to the results of the Business Expectation Survey (BES), business confidence in the economy weakened as the overall confidence index (CI) for July to September declined to 35.8% from 40.8% in the second quarter of the year.

“This is reflective of the combined decrease in the percentage of optimists and the increase in the percentage of pessimists during the quarter,” the BSP said.

The firms’ less optimistic sentiment in the current quarter was attributed to the decline in sales and demand for goods and services, mainly due to weather-related disruptions and other seasonal factors, higher prices of raw materials and production costs, elevated inflation and interest rates, and peso depreciation. 

Businesses are also expecting that the inflation rate may rise in the second half of 2023 but may decline in the next 12 months. 

“Although businesses expect that inflation may remain above the upper end of the national government’s 2% to 4% inflation target range for 2023–2024, inflation expectations among businesses may further ease in the next 12 months as the number of respondents who expected lower inflation outnumbered those who said otherwise,” the BSP said.

Businesses are expecting that the inflation rate may average 5.9% for the third and fourth quarters of 2023 and 5.7% for the next 12 months, it added.

Meanwhile, results of the Consumer Expectations Survey (CES) showed that consumers’ outlook turned less negative as the overall CI stood at -9.6% from -10.5% in the second quarter.

The lower negative CI is “reflective of the decrease in the percentage of pessimists, which outweighed the decrease in the percentage of optimists.”

The BSP said consumers attributed their less pessimistic view for the third quarter to more available jobs and permanent employment, higher income from wages/salaries, remittances, and other sources, and additional working family members.

The central bank, however, said consumers expect higher inflation, interest, and unemployment rates and a weaker peso.

“Households also expect that inflation may increase at a faster pace for all reference periods as the number of respondents who expect higher inflation for said periods increased compared with the second quarter 2023 survey results,” the BSP said.

Inflation snapped its six-month deceleration streak in August due to a faster increase in food and transport costs, clocking in at 5.3% from 4.7% in July.

The year-to-date inflation rate stood at 6.6%, still above the government’s 2% to 4% target ceiling. — VBL, GMA Integrated News