Businesses and consumers in the Philippines are feeling less optimistic about the economy, with concerns about lower sales, higher inflation, and geopolitical tensions impacting confidence, according to the Bangko Sentral ng Pilipinas (BSP).
Firms in the country reported a decline in optimism for the third quarter and the next 12 months, as they anticipate weaker demand for products and services. The overall confidence index among businesses dropped to 43.7 percent for the third quarter and 56.5 percent for the next 12 months, based on the BSP’s 2024 Second Quarter Business Expectations (BES) survey.
Consumers also expressed pessimism for the third quarter, citing concerns over higher inflation, lower income, and job scarcity. However, they remained optimistic about the economy in the next 12 months.
The BSP attributed the less optimistic outlook to factors such as higher inflation, the onset of off-milling and rainy season, lower economic growth, and conflicts abroad. Businesses are expecting inflation to remain at 4.4 percent for the third quarter and 4.5 percent for the next 12 months, above the BSP’s target range of two to four percent.
Meanwhile, the 2024 Q2 Consumer Expectations Survey (CES) showed a decline in consumer confidence for the third quarter, with Filipinos worried about escalating prices of goods and services, increased household expenses, and job availability. Spending outlook for households was also less upbeat for the third quarter, with a moderation in consumer spending expected.
Consumer sentiment remains mixed, with respondents anticipating inflation to average 4.7 percent for the next 12 months. Factors such as higher household spending, limited supply of goods and services, and concerns over government policies to combat inflation are expected to drive inflation.
The latest BES survey covered 1,536 companies nationwide, while the CES involved 5,575 households surveyed across the country. The overall outlook suggests a cautious approach by businesses and consumers amid economic challenges both locally and internationally.
