Expenditures, savings down in 2020
Consumer confidence weakens; better times seen for 2021
MANILA – Consumer outlook turned pessimistic for Q3 2020 with the overall confidence index (CI) sank to an all-time low of -54.5 percent since the beginning of the nationwide survey in Q1 2007 by the Bangko Sentral ng Pilipinas. The respondents, according to a BSP statement attributed their negative sentiment for Q3 2020 due to the COVId-19 pandemic. Other reasons cited by the respondents were high unemployment rate and less working family members, low and reduced income and faster increase in the prices of goods.
Consumer pessimism continued for Q4 as the CI moved into negative territory at -4.1 percent from the Q1 2020 survey result of 9.2 percent for Q2 2020. Consumers expressed fears of high unemployment rate, low, reduced and no increase in income and faster increase in prices of goods as reasons for their pessimistic outlook for Q4 this year.
However, consumer expressed optimism for the next 12 months as the CI increase to 25.2 percent from the Q1 2020 survey results of 19.9 percent for the next 12 months. The consumer outlook was upbeat for the next 12 months founded on the belief COVId-19 pandemic would end or at least return to normal and the anticipation of availability of more jobs, additional or higher income and stable prices of goods.
The confidence index fell because of the family’s financial situation and family income which registered all-time lows since Q1 of 2007.
The households’ spending outlook index on basic goods and services declined to 26.4 percent for Q4 2020, the lowest confidence index from Q1 2007 which indicate a contraction in consumer spending leading to the Christmas season.
Households with savings declined to 24.7 percent from 37.8 percent in Q1 2020. The decrease in the number of savers cuts across income groups but particularly in middle- and high-income groups which registered all-time lows since Q1 2007.
It was learned from households with savings, majority or 71.1 percent had their money in a bank for Q3 2020 though this percentage was lower compared to 73.9 percent in Q1 2020. According to the BSP, 61.8 percent kept their savings at home and 48.9 percent considered other institutions, including cooperatives, paluwagan and other credit/loan associations or in investments.
The consumers who took part in the survey expect increase in interest rates, appreciation of the Philippine peso for Q3 in 2020 and in the next quarter and in the next 12 months. The respondents also anticipated the increase in unemployment for the last two quarters of the year but would decline in the next 12 months. They also expect increase in commodity prices but will probably remain within the government’s inflation target range of 2 to 4 percent for 2020 and 2021.
The Q3 survey revealed that 97.2 percent of the 326 OFW households (from 93.9 percent on Q1 2020) said remittances were used to buy food and other household needs. It was learned the percentage of OFW househlds that apportioned their remittances for dept payments (18.4 percent), and investment (6.4 percent) were higher compared with the Q1 2020 survey results. The proportion of OFW households that allotted part of their remittances for education (60.1 percent), medical expenses (49.4 percent), purchases of consumer durables (16.9 percent), houses (7.1 percent), motor vehicles (2.8 percent), and savings (31.6 percent) declined. The latter registered the biggest decline among these types of remittances use when compared with the Q1 2020 survey results.
For Q3 2020, one in three households or 29 percent, reported they availed of a loan in the last 12 months. N credit access, 87.3 percent of the respondents found it easy to apply for a loan. The remaining 12.7 percent found it difficult due to numerous requirements, difficulty locating individual money lenders and COVId-19 pandemic.
The Q3 survey was made from July 1 to 14, 2020 as samples were drawn from the Philippine Statistics Authority’s (PSA) Master Sample of Households, considered representative sample of households nationwide. For the Q3 2020 study, 5,563 households were surveyed where 2,835 or 51% were from the National Capital Region and 2,728 or 49 percent were from Areas Outside NCR. (Melo M. Acuña)
A common scene in Metro Manila. (Melo M. Acuna photo)