Filipino consumers pessimistic for mid-2024, optimistic for next year

By Francis Allan L. Angelo

Consumer sentiment in the Philippines has turned more pessimistic for the second quarter of 2024, with the overall confidence index (CI) declining to -20.5 percent from -10.9 percent in Q1 2024.

The drop reflects a higher percentage of pessimists outweighing optimists, primarily due to concerns over rising prices, lower income, fewer available jobs, and doubts about the effectiveness of government policies on various fronts.

For the third quarter of 2024, the CI is slightly less negative at -0.4 percent, down from 2.7 percent in the first quarter.

Despite this short-term pessimism, consumer sentiment for the next 12 months (May 2024-April 2025) remains optimistic, with the CI holding steady at 13.5 percent, barely changing from 13.4 percent in Q1 2024.

The more pessimistic outlook for Q2 2024 spans all component indicators and income groups. This includes a negative outlook on the country’s economic condition, family financial situation, and family income.

Similarly, consumer confidence is down across low-income, middle-income, and high-income groups, mirroring the national trend.

Consumers are particularly hesitant about purchasing big-ticket items, with the CI for such purchases becoming more negative at -64.5 percent in Q2 2024, compared to -62.6 percent in Q1 2024.

Additionally, the percentage of households with loans and savings has declined. In Q2 2024, 24.6 percent of respondents reported taking out a loan in the past year, slightly down from 24.9 percent in Q1 2024, while those with savings decreased to 31.4 percent from 33.5 percent.

Expectations for higher inflation, rising interest and unemployment rates, and a weaker peso prevail among consumers for all reference periods. They anticipate that unemployment may rise and the peso may depreciate against the U.S. dollar in Q2 2024, Q3 2024, and over the next 12 months.

Consumers also expect interest rates to increase more quickly in Q2 2024 but at a slower pace in Q3 2024 and beyond. Inflation is expected to rise moderately in Q3 2024 and the next 12 months, with an average rate of 5.5 percent, above the government’s target range of 2 to 4 percent for 2024-2025.

Despite these challenges, the optimistic outlook for the next year suggests that consumers believe in potential improvements in the economic environment and their financial situations, which could drive a more positive sentiment moving forward.

View Full Report: https://www.bsp.gov.ph/Lists/Consumer Expectation Report/Attachments/23/CES_2qtr2024.pdf

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The Q2 2024 CES was conducted during the period 1 – 15 April 2024. In the Q2 2024 CES, 5,575 households were identified as eligible households – 2,776 (49.8 percent) were from the NCR and 2,799 (50.2 percent) from AONCR. Of the said sample size, 5,475 households participated in the survey, equivalent to a response rate of 98.2 percent (from 97.5 percent in the Q1 2024 survey). Respondents consisted of 2,736 households in the NCR (with 98.6 percent response rate) and 2,739 households in AONCR (with 97.9 percent response rate). The high-income group comprised the largest percentage of respondents (40.2 percent), followed by the middle-income group (38.3 percent) and the low-income group (21.5 percent).