Filipinos are more pessimistic about the economy and their finances next year, a survey done in the fourth quarter this year by the Bangko Sentral ng Pilipinas revealed.

Results of the survey showed consumer optimism for the first quarter next year weakened to 5.6 percent from 7.8 percent. the BSP reported in its third-quarter survey. 

Businesses, meanwhile, were slightly optimistic in the fourth quarter, with higher confidence at 35.9 percent from 35.8 percent. 

The BSP said business optimism comes from their expectations of increased demand for goods and services during the Christmas season, existing economic recovery and business expansions in the utilities, trade, financial, and hotels and restaurant sub-sectors.

Other factors are the development and launch of new products and services, faster consumer spending due to higher remittances and inbound holiday travelers, including overseas Filipino workers.

However, the BSP said negative factors, namely the impact of the ongoing conflicts in Gaza and Ukraine, elevated inflation, and higher interest rates dampened firms' optimism for this fourth quarter. 

For the next 12 months, consumer optimism fell to 15 percent from 18.9 percent.

Similarly, pessimism increased for the fourth quarter, with a drop in consumer confidence to -19 percent from -9.6 percent.

The BSP shared the consumers' negative outlook resulted from worries about possible higher prices of goods and services, fewer jobs and weak government policies and programs on inflation management, public transportation, and financial assistance to low-income households.

As a result, the BSP said consumers feel more hesitant to buy big-ticket items as their optimism on this area declined to -71.3 percent from -62.7 percent. 

Amid the still elevated inflation and interest rates, the central bank added fewer households applied for loans and started saving this fourth quarter.

The survey showed households with loans in the last 12 months declined to 22.9 percent from 26.6 percent posted in the third quarter. 

Savings level falls

Meanwhile, households with savings decreased to 29.1 percent from 32.8 percent.

"Consumers expect that the inflation rate may average at 6.9 percent for the next 12 months, which is above the upper end of the National Government's inflation target range of 2 to 4 percent for 2023-2024," the BSP report said.

The central bank said the pessimistic outlook is felt by all income groups.

"Consumer confidence for the current quarter deteriorated across the income groups, i.e., pessimism increased in the low- and middle- income groups, and optimism turned into pessimism in the high-income group," the BSP said.

The BSP estimates average inflation to settle at 6 percent this year, 3.7 percent for 2024 and 3.2 percent for 2025.

The central bank recently kept its policy rate at 6.25 percent to help prevent faster inflation. 

"The balance of risks to the inflation outlook still leans significantly toward the upside," BSP Governor Eli Remolona Jr. said at the central bank's policy meeting on Thursday.