'Ondoy,' 'Pepeng' douse consumer confidence

MANILA, Philippines - The impact of typhoons “Ondoy” and “Pepeng” doused consumer confidence in the country as revealed by the grim economic outlook in the fourth quarter of the year and the first quarter of next year, Bangko Sentral ng Pilipinas (BSP) deputy governor Diwa Guinigundo said.

Guinigundo said the BSP’s Consumer Expectations Survey (CES) had weakened further to -36 percent in the fourth quarter, from -31.9 percent in the third quarter.

Guinigundo said consumer confidence index for the first quarter of next year slid to -10.5 percent in the fourth quarter from -3.5 percent in the third quarter.

“Quarter-on-quarter there was less optimism but year-on-year the trend is that respondents are more optimistic,” he said.

As a consolation, Guinigundo pointed out the current quarter outlook was better than the -40.3 percent registered in the fourth quarter last year when the country’s economic growth slowed down to its slowest level in seven years with 2.9 percent, while the US economy contracted by 3.8 percent.

“This indicated that more consumers think that they are better off now than they were a year ago, when the effects of the global financial crisis were most pronounced,” said BSP’s Department of Economic Statistics director Rosabelle Guerrero.

Guerrero though admitted consumer sentiment weakened further in the fourth quarter as most respondents of the survey believed that the damage caused by the natural calamities would result in higher commodity prices and lead to higher unemployment.

Guerrero pointed out the current quarter outlook mirrored the bearish tone in consumer sentiment in the US, Australia and Germany.

The respondents believe that the effects of the recent natural calamities are temporary and that the economy would bounce back over the next 12 months, she said.

“Going forward, consumer sentiment for the next 12 months showed a slight rebound, with consumers of the view that the effects of the recent natural calamities are temporary and that the economy could bounce back over the near term,” Guerrero said.

Data showed the overall consumer confidence index over the next 12 months improved slightly to -0.8 percent in the fourth quarter from -0.9 percent in the third quarter.

Guerrero said consumers are most concerned about the domestic economy, particularly job availability and good governance issues.

The index on family income was at -15 percent in the fourth quarter from -12.7 percent in the third quarter, while the index on family financial situation went to -29.5 percent from -28.6 percent.

The BSP said consumers are expected to spend more for food, electricity, transportation, fuel, clothing and footwear in the fourth quarter.

Furthermore, consumers are not considering buying big-ticket items, particularly motor vehicles and consumer durables.

Consumers, however, believe that less favorable income expectations would result to slower spending in the first quarter of next year.

The CES that started in the first quarter of 2007 covered 5,496 households who responded to questions from Oct. 1 to 27.