Business confidence in the Philippines improved in the second quarter from the previous quarter on the economy’s sustained return to greater normalcy and easing inflation.
Results of the latest Business Expectation Survey of the Bangko Sentral ng Pilipinas showed that the overall confidence index climbed to 40.8 percent in the second quarter from 34 percent in the first quarter.
“The respondent firms’ optimism stemmed from their expectations of increase in sales and production due to stronger demand for goods and services across all sectors, continued post-pandemic recovery, fully reopened economy, easing inflation and seasonal uptick in demand for certain goods and services during the hot dry season,” the BSP said.
Inflation has been on a downward trend since it peaked at 8.7 percent in January 2023. It eased to 8.6 percent in February, 7.6 percent in March, 6.6 percent in April and 6.1 percent in May. This brought the average in the first five months to 7.5 percent, above the target range of 2 percent to 4 percent.
“Business sentiment across all sectors is mainly more optimistic for Q2 2023. The confidence indexes of the industry, services, and wholesale and retail trade sectors for Q2 2023 increased, while the index of the construction sector declined,” the BSP said.
Meanwhile, consumer sentiment for the second quarter remained pessimistic as the overall confidence index was steady at -10.5 percent, compared to -10.4 percent in the first quarter. This means that pessimists continued to outnumber optimists, but the margin was almost unchanged from the previous quarter.
“The sustained negative sentiment for Q2 2023 was attributed by consumers to their concerns over faster increase in the prices of goods and higher household expenses, lower income, fewer available jobs and the effectiveness of government policies and programs on inflation management, economic resilience, high-quality and well-paid job creation and financial assistance to low-income households,” the BSP said.
Consumers were less confident for the next quarter and the next 12 months as the confidence index declined to 4.6 percent and 20.5 percent (from 7.5 percent and 22.7 percent), respectively.
Consumer outlook remained pessimistic across component indicators but mixed across income groups for the second quarter.
They are pessimistic across the three component consumer confidence indicators such as economic condition, family’s financial situation and family income, while consumer sentiment was mixed across income groups.