General outlook improves — poll

Consumer sentiment improved, while businesses were more optimistic in the fourth quarter, results of the latest Consumer Expectations Survey (CES) and Business Expectations Survey (BES) of the Bangko Sentral ng Pilipinas (BSP) showed.

Results of the CES released late Thursday showed that the consumer sentiment in the fourth quarter improved as the overall confidence index (CI) improved at -11.1 percent from -15.6 percent in the third quarter.

Consumers and businesses expect higher interest rates next year.

Based on the BSP’s quarterly survey, more households believe the higher interest rates might extend from the fourth quarter of the year to the first quarter of 2025 and the next 12 months or until October 2025.

Households project the inflation rate will hit an average of 6.2 percent in the next 12 months, higher than the government’s target of 2 percent to 4 percent.

Consumers said they are worried about higher food prices, government policies about price management, limited supply of goods and services, and higher utility bills.

At the same time, consumers expect the peso to weaken against the US dollar over the medium term which means possibly costlier imported goods.

In contrast, more consumers see a better economy in the fourth quarter due to expectations of higher incomes and more working family members.

This was reflected in the latest overall confidence index of -11.1 percent, a less negative number than the -15.6 percent recorded in the third quarter for the economic outlook for the fourth quarter.

The survey showed more consumers are encouraged to buy big-ticket items in the fourth quarter as their confidence index turned less negative at -67.3 percent from -68.9 percent.

The positive sentiment was seen despite the lower number of households that said they have savings, accounting for 25.6 percent of all respondents from 29 percent in the third quarter.

25% of households have debts

Meanwhile, the share of households that availed of loans in the last 12 months was unchanged at 25.5 percent.

Businesses also expect inflation rates to rise toward an average of 3.6 percent by the end of the year and 3.7 percent in the first quarter of next year and the next 12 months.

Their forecasts, however, fall within the government’s target range of 2 to 4 percent.

“For the first quarter of 2025, firms anticipate inflation to rise on the back of higher prices of basic commodities, midterm election-related spending and business activities, and higher fuel prices and supply chain disruptions due to ongoing international conflicts,” the BSP survey said.

For the fourth quarter, more firms expect higher sales and continued supplies of materials and services for exports and domestic market.

This translated into an overall confidence index of 44.5 percent from 32.9 percent.

“Businesses were more optimistic as they expected an increase in demand for goods and services during the yuletide holidays, easing inflation, lower interest rates, development of new products and expansion of business operations,” the BSP survey said.