Local Firms, Citizens Feel Positive Over Economic Improvements for Q1 2019
The latest quarterly Business Expectations Survey (BES) and Consumer Expectations Survey (CES) of the Bangko Sentral ng Pilipinas (BSP) indicate a positive outlook for the first quarter of the Philippines’ economic status. According to both surveys, the confidence indexes show promise for the continued economic improvements felt by both business owners and individuals.
The current business confidence rate rose to 35.2% from Q4 2018’s 27.2%, breaking the four consecutive quarters of decline experienced by businesses last year. Local consumer outlook has its fair share of optimistic and pessimistic views. Thus, the consumer outlook index rose to a stunning -0.5% from Q4 2018’s -22.5%. BSP states that the current data is registered as the largest quarter-on-quarter increase “since the start of the nationwide survey in Q1 2007.”
The positive outlooks of BES respondents were primarily attributed to the following factors:
- More business activities during the start of the campaign period for the upcoming midterm senatorial elections;
- Increased order and consumer purchases with the easing of inflation;
- Huge infrastructure spending and focus on the government’s “Build, Build, Build” infrastructure campaign;
- Introduction of new and enhanced business strategies and processes; and
- Expansion of businesses and new product lines.
In the case of CES respondents, their optimistic outlooks were based on their expectations of additional or higher Income, improvement in peace and order, availability of more jobs and good governance.
According to BSP, the respondents have a more “bullish” output for the upcoming quarter (Q2 2019). The increase in tourism demand, enrollment and harvest periods, high production volumes, and the influx of construction projects for public and private sectors attributed to the rise of business confidence for Q1 2019.
Filipinos Show Upbeat Outlook
Businesses in the construction industry continuously receive public and private infrastructure programs and projects at the start of the year. It is expected that these upcoming ventures will continue to thrive in Q2 2019.
Meanwhile, the trade industry expects better outcomes and its demand dwindled right after the Christmas season. Its business conditions suffered from competition with shopping malls and supermarket chains, and the continued rise of fuel costs because of TRAIN (Tax Reform for Acceleration and Inclusion) law’s implementation by the government.
Consumer confidence improved across various respondents from different income groups. The lower income group show less pessimism, while it appeared positive for the middle-income group, and more favorable for respondents in the high-income group with the anticipation of more income and additional working family members.
BSP also states that consumers expect to spend less in the next quarter. Their spending outlook declined to 39.6% from the previous quarter’s 42.3%. However, consumers still expect inflation and interest rates to rise. Contrary to what businesses expect, the Philippine peso might also decrease during the remainder of 2019.