CHRISTMAS is only weeks away but rising prices, a weak currency and higher interest rates threaten to dampen the spending habits among Filipinos during the shopping season as businesses and consumers show their lowest confidence levels in almost eight years.
The latest survey done by the Philippines Central Bank (BSP) found most businessman and consumers polled in the fourth quarter of the year showed a level of pessimism that has not been seen since 2010.
According to The Inquirer, the central bank said its overall confidence index has declined to 27.2 percent, from 30.1 percent in the third quarter of 2018.
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“Despite the expected uptick in demand during the Christmas season, business outlook was less buoyant for the current quarter due to higher inflation driven by rising raw material costs and global oil prices; weakening peso; higher interest rates (i. e. , borrowing costs); decrease in volume of sales and orders; and lack of supply of raw materials,” it was quoted as saying.
About 90 percent of the Philippines population is Christian and the country has earned the distinction of celebrating the longest and merriest festivity in the world, according to the AFP.
While the overall predictions remain positive, the respondents of the survey expected business conditions to be less bullish for the first quarter of 2019.
The current forward-looking sentiment in the business sector is also the weakest seen since the third quarter of 2009, the bank said.
“Respondents attributed their weaker outlook for the first quarter of 2019 to the usual slowdown in consumer demand after the holiday season,” the central bank said.
“Moreover, the sentiment of firms was tempered by expectations of a peso depreciation, which increases the costs of imports, as well as higher inflation and interest rates.”
To come up with the index, the central bank gave several indicators for respondents to answer in the affirmative or in the negative to tabulate their views and sentiments.
“The current quarter registered the lowest reading back in the fourth quarter of 2014 and posted the largest drop by 15.4 percentage points since the nationwide survey started in the first quarter of 2007,” the central bank said.
The consumer confidence index measures three aspects; overall condition of the economy, household finances and household income.
“The negative index indicates that the pessimists outnumbered the optimists,” the central bank said.
The bearish outlook among consumers was due to higher prices of commodities, low income, higher cost of living, low prospects of increased wages and rising unemployment.