MANILA – Higher inflation continues to dampen consumers’ confidence in the second quarter of 2023, but business sentiments improved due to expectations for higher sales and production and post-pandemic recovery, among others.
Business sentiments turned more upbeat with the index improving to 40.8 percent from the previous quarter’s 34 percent, Bangko Sentral ng Pilipinas - Department of Economic Statistics (BSP - DES) senior director Redentor Paolo Alegre Jr. said Friday during a virtual briefing on the release of the second quarter 2023 consumer expectations survey (CES) and the business expectations survey (BES).
Citing survey results, he traced businesses’ optimism to increase in sales and production because of higher demand for goods and services, recovery of activities after the pandemic, full reopening of the economy, deceleration of domestic inflation rate, and seasonal jump in demand during the summer months.
He said the optimism is similar to those in Hong Kong, South Korea, and the United States.
He, however, noted that business sentiments for the next quarter is weaker, with the index down to 46.4 percent from 49 percent during the survey in the first quarter of the year.
This was traced to seasonal decline in demand during the rainy days, elevated inflation, fewer construction projects, and high interest rates.
Relatively, Alegre said index for the next 12 months slipped from 61.9 percent to 58.5 percent due to concerns on the inflation rate, expectations for lower demand and its impact on sales, perceived slower rollout of government infrastructure projects, higher interest rates, and worries on the impact of El Niño.
For the CES, the confidence index remains in the negative at -10.5 percent from -10.4 percent in the first quarter of the year.
Results of the survey attributed this to acceleration in the rate of prices of goods and household expenses, lower income, fewer available jobs, effectiveness of government policies and programs on inflation management, economic resilience, creation of high-quality and well-paid jobs, and financial aid to low-income households.
This sentiment is carried on for the next quarter and the next 12 months, with the index at 4.6 percent and 20.5 percent, respectively, survey results showed.
In terms of select economic indicators, the consumers expect inflation rate and interest rates to increase until the third quarter, for the peso to depreciate against the US dollar, but for unemployment rate to decline.
For the businesses, the peso is seen to depreciate against the greenback for the second quarter but strengthen in the third quarter and the next 12 months.
Inflation is seen to ease for the second quarter, next quarter, and the next 12 months, Alegre added. (PNA)
