Consumer confidence plunges to all-time low, to stay bleak for the rest of 2020 – BSP

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Metro Manila (CNN Philippines, September 24) — Consumer confidence among Filipinos took a nosedive in the third quarter, bogged down by lower incomes and high unemployment amid the COVID-19 pandemic.

The Bangko Sentral ng Pilipinas (BSP) said the consumer confidence index netted -54.5 percent, showing that more Filipinos saw their family incomes and financial situations worsen as the country remains in crisis.

The July 1-14 survey covered 5,563 households, and is the first to be conducted since Luzon went on lockdown since March. The BSP cancelled the second quarter survey due to quarantine restrictions.

More Filipinos were pessimistic about financial prospects as they saw lower incomes and a faster pickup in the prices of basic goods. Consumer confidence dropped across all income groups, with three in five poor families reporting negative sentiment.

Two-thirds of respondents said they expect economic conditions turn for the worse, while half said they see their family income and financial situation hit hard by the pandemic.

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By location, Metro Manila residents were more upset about their prospects at -57.9 percent. Those from provinces were a little less pessimistic at -53.9 percent, data showed.

Fewer households were able to maintain savings during the quarter, which saw more than four million Filipinos without jobs. Only 24.7 percent were able to set aside some money, against 37.8 percent of families who managed to save from January-March.

This gloomy outlook is seen to stretch to the last three months of the year, notwithstanding the holiday season. Low consumer confidence translates to fewer people shopping or dining out amid the pandemic.

Business outlook bleak

More companies also thought times were tough, with business confidence slipping to -5.3 percent from a positive 22.3 percent rating in the first quarter.

Businesses are also reeling from the COVID-19 crisis and community quarantine rules, with many establishments shut down during the lockdown period. There's also a drop in orders, sales, and profits, while other business owners worry about "perceived insufficient mitigation measures" on the part of government to fight the virus.

Players in the services sector reported the biggest downturn, while those in the construction sectors managed to keep a positive outlook. However, there was a marked decline in capacity utilization as firms limit their operations following state protocols. Many tempered their expansion plans for the year as well.

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Businesses are optimistic about the upcoming holiday season, but expect muted economic activity as the impact of the pandemic lingers.

BSP Assistant Governor Iluminada Sicat said that while the indices remain negative, there are signs of economc recovery seen in other economic indicators on trade, remittances, and investments. Movement restrictions have also been eased.

"Based on these indicators, we've seen the worst in Q2. We're expecting improvements in Q3 (economic performance) –– probably it will remain to be negative but not as deep as what we have seen in Q2," Sicat said in a press briefing.

Better 2021 expected

Consumers and companies are counting on better days next year, banking on the invention of a coronavirus vaccine and the sustained reopening of the local economy.

Consumer confidence for the year ahead is at a positive 25.5 percent, better than the previous 19.9 percent, as they expect their lives to return to normal with more jobs, higher incomes, and stable prices of goods.

Businesses are also optimistic, but tempered compared to the previous survey as they see the ill effects of COVID-19 persisting.

President Rodrigo Duterte's economic team believes the Philippines can return to its growth path and see output rise by 6.5-7.5 percent. However, BSP Governor Benjamin Diokno said growth cannot "rebound significantly" until confidence is restored.

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About 75 percent of the economy has reopened, Acting Socioeconomic Planning Secretary Karl Kendrick Chua earlier said, but pointed out that people are still reluctant to head out due to limited public transport options and the general fear of getting infected.