Filipino consumers continue to see bright things ahead and feel good about their economic conditions in the midst of all the political, financial and social problems around them.
This positive outlook is reflected in the latest MasterCard Worldwide Index of Consumer Confidence (MWICC), Asia/Pacific’s most comprehensive and longest-running survey, which tracks consumer confidence half-yearly for the six-month period ahead.
According to the MWICC’s fourth-quarter 2007 report, Filipino consumer confidence for the first half of 2008 stands at a fairly optimistic index of 67.7 — the highest for the Philippines since the fourth quarter of 1997. The latest score sustains a steady improvement in the country’s consumer-confidence level, which has rebounded significantly from a pessimistic 28.9 index in fourth-quarter 2005 to optimistic norms of 51.9 in second-quarter 2006, 57.2 in fourth-quarter 2006 and 64.6 in second-quarter 2007.
The scores, ranging between 0 and 100, are based on responses to five variables: employment, economy, regular income, stock market and quality of life. Scores above 50 indicate extent of optimism, scores below 50 indicate extent of pessimism, with 50 being neutral.
Jose Rene Villa-Real, vice president and senior country manager, MasterCard International Philippines Inc, said, “The current fairly optimistic sentiments in the Philippines are buoyed by a very highly positive outlook on regular income and improved sentiment on the stock market. These are supported by slightly optimistic expectations of employment, economy, and quality of life.”
The newest MWICC report shows that outlook on regular income improved to a score of 96 compared to 94.5 a period ago and 89 a year ago, while perception of the stock market is up considerably to 74.4 versus 61.9 a period ago and 62.6 a year ago. There’s also an enhanced confidence in employment (57.5 from 55.3 a period ago and 45 a year ago) and in the economy (58.6 from 57.6 a period ago and 46.7 a year ago). Outlook on quality of life remains optimistic but dips to 52 from 53.6 six months earlier.
External data show supporting evidence that Filipinos see a rosy picture despite nagging national problems like charges of corruption, military unrest, and political instability.
A major factor contributing to consumer optimism is dollar remittances from overseas workers, which they consider regular income. Ever resilient, more than eight million Filipinos are working abroad. In 2006, they remitted a total of US$13.7 billion. This amount, as per a study by the United Nations International Fund for Agricultural Development and the Inter-American Development Bank, accounted for the fourth largest remittance among developing countries that year. In the first 10 months of 2007, OFWs sent home $11.9 billion, an increase of 15.2 percent from a year ago, data from the Bangko Sentral revealed.
Another element that comes into play is the thriving business process outsourcing (BPO) industry that includes call centers, legal services, web design, medical transcription, software development, animation and shared services. According to the Business Processing Association of the Philippines (BPAP), BPO is the fastest-growing sector in the Philippines today. In less than 10 years, BPO has provided jobs to some 300,000 Filipinos and earned some $3.3 billion in revenues for the country. Under BPAP’s Roadmap 2010, the industry expects an annual growth rate of 40 percent and by 2010, the Philippines is projected to get a 10-percent share in the global outsourcing market with revenue breaching $13 billion and jobs generated hitting one million. Just recently, the Philippines received the “Outstanding Destination Award” from the London-based National Outsourcing Association, which recognizes the best off-shoring and out-sourcing destination in the world.
The stock market has also turned in a bullish performance in 2007. As reported by the Philippine Stock Exchange, the market enjoyed a banner year in 2007 with new records set in the yearend level of the main index, market capitalization, value turnover and proceeds from capital-raising activities. The PSEi jumped 21.4 percent to 3,621.6 points at the end of 2007; from 2,982.54 in 2006 to record the index’s highest yearend closing level. This marked the fifth straight year of advance of the main index, which also expanded by 42.3 percent in 2006, 15 percent in 2005, 26.4 percent in 2004 and 41.6 percent in 2003.
“Strong sentiments about the stock market, although not sufficient to render it statistically significant, have also helped drive the slight improvement in the Philippines’ current measurement,” Villa-Real noted.
With all these factors in place, Filipinos are seeing good reason to be upbeat in the face of challenges and are getting more confident about their capabilities to acquire the goods and services they need.