BSP, biz leaders hopeful despite dampened sentiments in Q4

This, as the elevated inflation rate earlier in the year dampened sentiments of both the business community and the consuming public in the fourth quarter of 2018, two separate Bangko Sentral ng Pilipinas (BSP) surveys revealed. (Photo: Bangko Sentral ng Pilipinas/Facebook)

MANILA — Monetary officials and business leaders remain hopeful that both business and consumer sentiments would start perking up in the closing days of the year as inflationary pressures ease.

This, as the elevated inflation rate earlier in the year dampened sentiments of both the business community and the consuming public in the fourth quarter of 2018, two separate Bangko Sentral ng Pilipinas (BSP) surveys revealed.

BSP Deputy Governor Diwa Guinigundo, in a briefing Thursday, said the sentiments would not have been so negative had respondents known that November inflation would settle back to only 6 percent from a multi-year high of 6.7 percent in September and October.

The Philippine Statistics Authority (PSA) only reported the November 2018 inflation last December 5.

“I don’t think they had the benefit of knowing that Congress has approved the rice tariffication bill that would reduce inflation by 0.85 percentage point and that oil prices, both global and domestic, have started to decline,” Guinigundo said.

“Looking at the actual developments, this may no longer be the case at this point when the more positive developments have taken place,” he pointed out referring to the notable recovery of the peso against the US dollar.

To date, the peso is trading at the 52-level against the greenback, a marked improvement over the 54-level last October.

Meanwhile, Philippine Chamber of Commerce and Industry (PCCI) chairman emeritus Francis Chua said his group does not necessarily share the supposed pessimism of some entrepreneurs.

Chua said that looking forward, they remain upbeat about the economy, noting that the private sector will collaborate with government in efforts to enhance the business climate.

“We are hopeful, we always have to be hopeful and supportive,” he added.

Results of the central bank’s Business Expectation Survey (BES), done on Oct. 1-23, showed that the confidence index (CI) slipped to 27.2 percent from 30.1 percent in the third quarter of the year.

For the same quarter, the Consumer Expectation Survey (CES), CI went down to -22.5 percent from -7.1 percent in the previous quarter.

In both surveys, respondents identified the higher prices of goods and higher rate of price increases as the main culprit for their subdued optimism.

This, after inflation posted sustained increases until last October as prices of food items, such as rice, fish, meat and vegetables, continue to rise due to supply constraints.

Specifically, BES respondents cited higher inflation due to rising cost of materials and global oil prices as the main reason for their pessimism along with weakening peso, higher interest rates, decline in volume of sales and orders, and lack of supply of raw materials.

For the CES, aside from higher prices of commodities respondents said low salary/income, increase in household expenses, no increase in income and rise in number of unemployed people contributed to the decline of their sentiments.