NextGen Day

Inflation continues to drag on consumer confidence in the second quarter of 2023, while corporate attitudes have improved due to, among other things, expectations for stronger sales and output as well as post-pandemic recovery.

Redentor Paolo Alegre Jr., senior director of the Bangko Sentral ng Pilipinas – Department of Economic Statistics (BSP – DES), said during a virtual briefing on the release of the second quarter 2023 consumer expectations survey (CES) and the business expectations survey (BES) on Friday that business sentiments improved to 40.8 percent from the previous quarter’s 34 percent.

He linked businesses’ expectations of higher sales and production to higher demand for goods and services, the recovery of activities following the pandemic, the full reopening of the economy, the slowing of the domestic inflation rate, and the seasonal spike in demand during the summer months. He did this by citing survey results.

He claimed optimism is comparable to that of Hong Kong, South Korea, and the US.

However, he pointed out that the index for business sentiment for the upcoming quarter has declined from 49 percent during the poll in the first quarter of the year to 46.4 percent.

This was linked to a seasonal drop in demand during wet weather, rising inflation, a lack of construction projects, and high lending rates.

As a result of worries about the inflation rate, forecasts for lower demand and how that will affect sales, the perception of a slower rollout of government infrastructure projects, higher interest rates, and worries about the effects of El Nio, Alegre’s index for the upcoming year fell from 61.9 percent to 58.5 percent.

The confidence indicator for the CES is still negative, dropping from -10.4 percent in the first quarter of the year to -10.5 percent today.

The survey’s findings indicated that this was due to a rise in the prices of goods and household expenses, a decline in income, a lack of jobs available, the success of government policies and programs aimed at controlling inflation, economic resilience, the creation of high-quality jobs, and financial assistance for low-income households.

According to poll findings, this feeling will persist over the next three months and the following year, with the indices at 4.6 percent and 20.5 percent, respectively.

Regarding a few key economic indicators, consumers anticipate rising inflation and interest rates through the third quarter, as well as a fall in the peso’s value relative to the US dollar but an increase in the unemployment rate.

Businesses anticipate that the peso would weaken against the dollar in the second quarter but strengthen in the third and the following year.

Alegre continued, “Over the next 12 months, the inflation rate is anticipated to decline.”

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