Business and consumer sentiments remained optimistic in the third quarter of 2024 despite an anticipated increase in inflation rate in the next 12 months, according to the Bangko Sentral ng Pilipinas (BSP).
Results of the latest Business Expectation Survey showed that the overall confidence index (CI) held steady at 32.9 percent in the third quarter, from 32.1 percent in the second quarter of 2024.
“The steady sentiment reflected the decrease in the percentage of pessimists, which outweighed the decrease in the percentage of optimists,” the BSP said in a statement.
Meanwhile, consumer sentiment for the third quarter of 2024 also improved as the overall confidence index (CI) turned less negative at -15.6 percent from -20.5 percent in the second-quarter survey results.
The BSP said the firms’ upbeat business confidence in third quarter was buoyed by their anticipation of increase in demand for certain goods and services such as food and beverage, apparel, education and personal services; easing inflation; seasonal uptick in business activities due to the start of the new school term and the pre-holiday inventory stocking by retailers, and expansion and improvement of business operations.
The BSP said that for the fourth quarter, business confidence turned bullish, as the overall CI improved to 56.8 percent from 43.7 percent in the second quarter of 2024 survey results. For the next 12 months, business outlook is also more upbeat as the overall CI increased to 58 percent from 56.5 percent in the second quarter survey results.
Companies expect tight cash or liquidity positions in the third quarter of 2024 as the financial condition index was little changed. Businesses anticipate tight access to credit in the third quarter of 2024 as the index on access to credit remained negative.
Firms also expect that the peso may depreciate against the US dollar in third quarter 2024 but may appreciate in the fourth quarter of 2024 and the next 12 months. Firms expect that peso borrowing rates may rise in the second half of 2024 and the next 12 months.
“Businesses anticipate that the inflation may rise in the second half of 2024 and the next 12 months. However, the number of firms that expected higher inflation decreased vis-à-vis the second quarter of 2024 survey results,” the BSP said.
Meanwhile, consumer sentiment for the third quarter of 2024 improved, “reflective of the decrease in the percentage of pessimists, which outweighed the slight decrease in the percentage of optimists.”
Respondents said their less pessimistic sentiment for the third quoter of 2024 was attributed to expectations of higher income from wages/salaries, remittances, and other sources; additional sources of income; permanent employment and more available jobs, and additional working family members.
For the next quarter, the consumer outlook turned optimistic as the CI reverted to positive territory at 0.7 percent from -0.4 percent in the second quarter of 2024.
The BSP also said that consumers anticipate that interest rates may increase and the peso may depreciate against the US dollar for the third quarter and fourth quarter of 2024 and the next 12 months.
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