MANILA -- Filipino consumers’ spending outlook on basic goods for the fourth quarter of 2018 has notably improved and this is expected to bring windfall benefits to the domestic economy.
Results of the Bangko Sentral ng Pilipinas’ (BSP) Consumer Expectation Survey (CES), conducted from July 1-14, 2018, showed that index on spending outlook rose to 45.7 percent from 36.3 percent in the previous quarter’s survey.
BSP Deputy Governor Diwa Guinigundo, in a briefing Friday, said CES results’ correlation to gross domestic product (GDP) is about 0.65 percent. “If we take a look at the consumption expenditure it is basically going up so given the correlation of 0.65 (percent) we can expect that the third quarter GDP will show some gains,” he said.
Domestic growth in the second quarter this year slowed to six percent from 6.6 percent in the previous quarter, due in part to deceleration of consumption expenditure. “So we would expect that for this next three months we would expect some gains in consumption expenditure,” he said.
Consumers’ positive spending outlook for the last quarter of the year is a welcome development after results of the CES for the third quarter this year indicated that consumer sentiment turned sour, with the index going to the negative territory at -7.1 percent from 3.8 percent in previous quarter’s survey, he added.
Respondents attributed their negative outlook to higher commodity prices, lower salary, higher household expenses, high unemployment rate and no increase in income.
For the next quarter, the index went down to 3.8 percent from the previous quarter’s 8.7 percent. The index for the next 12 months had gone on the same path after it went down to 13 percent from 23.1 percent in the previous quarter.
Some respondents ticked the box that said “no increase in income” as among the reasons for their negative outlook for the quarter and until the next 12 months.
This, even as the Tax Reform for Acceleration and Inclusion (TRAIN) law, which cut workers’ tax rates and increased the amount of annual income that is tax-free t PHP250,000, took effect at the start of this year.
Respondents belonging to the low-income group, or those with monthly income of less than PHP10,000, accounted for 39.6 percent of the total survey respondents.
Guinigundo, when asked by PNA about this, said that people “who don’t pay income tax did not benefit from the lower tax rates.”
He, however, pointed out that “no increase in income” could be perceived by anyone regardless of his income class.” “In fact, it’s possible that those in the lower income classes could have experienced higher income because of the conditional and unconditional cash transfers,” he added.
The government has allocated some PHP25.6 billion under this year’s national budget for the unconditional cash transfer (UCT) program as a mitigating measure to supplement the incomes of the 10 million poorest households, who are affected by higher taxes as as result of the implementation of the first tax reform package.
While TRAIN cut workers’ tax rates, it increased excise tax on fuel products and introduced excise tax on sugar-sweetened beverages and automobiles. The increase and introduction of excise tax on several commodities was made to counter the impact of lower revenues as a result of cut in personal income tax.
Under the proposed 2019 national budget, about PHP36.5 billion has been appropriated for the UCT. (PNA)
