MANILA – Sentiments of both the consumers and businesses turned negative in the third quarter of the year due to worries on the impact of the coronavirus disease (Covid-19) pandemic.
The results of the Bangko Sentral ng Pilipinas’ (BSP) third quarter 2020 Consumer Expectations Survey (CES) showed a record-low index of -54.5 percent from the previous quarter’s 1.3 percent index.
The results of the Business Expectation Survey (BES) for the same quarter indicated the index fell to the negative territory at -5.3 percent after posting positive indices since the third quarter of 2009.
In a virtual briefing Thursday, BSP Governor Benjamin Diokno said these results are “expected considering the effects of Covid-19 on businesses and jobs.”
Respondents to the CES attributed their pessimism, from an index of 1.3 percent in the first quarter’s survey to high unemployment rate and less working family members, low and reduced income, and faster increase in the prices of goods.
This sentiment is similar to those from Australia and the Euro area for the same period.
For the next quarter, the index remains in negative territory at -4.1 percent from 9.2 percent during the survey in the first quarter.
The expectations for the next 12 months, on the other hand, turned optimistic, with the index improving to 25.5 percent from 19.9 percent in the first quarter’s survey due to hopes for the end of the pandemic as well as the availability of more jobs, additional income, and stable prices of goods.
For the BES, the negative index for this quarter is a change from the 43 quarters of positive indices due to businesses’ outlook on the pandemic and the imposition of community quarantine, the drop in orders, sales, and income; slowdown or temporary shutdown in business operations, and concerns over government policies on the perceived insufficient measures against Covid-19.
The gloomy outlook continues until the last quarter of the year, with the index down to 16.8 percent from the previous quarter survey’s 42.3 percent.
Outlook for the next 12 months is weaker at 37.5 percent from 55.8 percent in the previous survey.
During the briefing, BSP assistant governor Illuminada Sicat attributed the better outlook in the next quarters to signs of economic recovery based on monthly statistical indicators of the Philippine Statistics Authority (PSA).
“There’s still a contraction in potential output for the third quarter but then the contraction has been declining,” she said.
The domestic economy entered a recession in the second quarter of 2020 after the -0.7-percent contraction of growth, as measured by gross domestic product (GDP), in the first quarter was followed by a deeper -16.5-percent contraction.
For this year, economic managers expect GDP to be at -5.5 percent but a recovery to between 6.5 to 7.5 percent is targeted for next year.
Sicat said signs of recovery have been seen on foreign direct investments (FDI), remittance flows from overseas Filipino workers (OFWs), and exports.
FDI posted a net inflow of 7.1 percent to USD481 million last June from year-ago’s USD449 million.
Net FDI inflows improved for the second consecutive month last June from the previous month’s USD402 million after dipping to USD314 million last April.
Cash remittances posted negative year-on-year prints from March to May 2020 with an annual contraction of -4.7 percent, -16.2 percent, and -19.3 percent, respectively.
However, the June 2020 figure grew by 7.7 percent and this further improved last July after it rose by 7.8 percent.
Year-to-date growth is -2.4 percent.
Monetary officials expect remittances to post a 5-percent contraction this year but to recover to 4 percent next year. (PNA)
