Consumers, businesses turn gloomy anew on lingering pandemic woes

MANILA, Philippines — Consumers and businesses in the country are adopting a less upbeat outlook for the months ahead as the economy remains on lockdown, creating a big roadblock for a convincing economic comeback from a pandemic-led recession, the Bangko Sentral ng Pilipinas reported Friday.

Results of a nationwide BSP survey of 5,422 families showed the overall consumer confidence index (CI) stayed in the negative zone at -34.7% in the first quarter, albeit better than -47.9% reading in the preceding quarter. But the mood is turning gloomy anew as the consumer CI contracted again to -2.2% in the second quarter, while confidence for the next 12 months sank to 17.9% from 23.6% previously.

At the same time, a separate central bank poll of 1,513 companies showed the business CI crashed to 1.4% for the second quarter from 17.4% in the preceding three months. For the third quarter and the next 12 months, business sentiment sagged to 31.4% and 52.5%, respectively.

That the consumer CI remains in the negative territory means pessimists continued to outnumber optimists. Meanwhile, the slump in business mood means more enterprises are turning less upbeat for the coming months.

The latest survey results were not surprising at all. After being smashed by strict lockdowns last year, both business and consumer sentiment were actually on the mend in the final three months of 2020 as curbs were relaxed. But renewed lockdowns in Metro Manila and four nearby areas meant to arrest a deadly resurgence of infections earlier this year snapped the fragile recovery.

For Nicholas Antonio Mapa, senior economist at ING Bank in Manila, uncertainty remains especially for businesses. “Firms are now aware that resurgence of the virus can translate to renewed lockdowns that can have a detrimental impact on growth prospects,” Mapa said in an e-mail exchange.

Breaking down the BSP’s report, both consumers and businesses attributed their less rosy outlook on existing pandemic restrictions. They also cited elevated inflation as a concern, with soaring prices compounding the impact of the recession on both household income and company sales.

As the economy stays in bad shape and banks’ credit standards remain tight, families are not expecting any big-ticket purchases in the next months while business are not keen on expanding their operations or urgently hiring more people.