JOBS AND HIGH PRICES WORRY PHILIPPINE CONSUMERS.

In terms of population the Philippines, 84-million people, is the second biggest country in Southeast Asia after Indonesia (219-million). The Philippines is also the second most important economy, again following Indonesia. What consumers are thinking in the Philippines, therefore, can be important to the economic prospects of the region. According to the Bangko Sentral ng Pilipinas (BSP), the Philippines central bank, consumer spending at the end of 2004 was "robust". But, the BSP's recent Consumer Expectations Survey, in October of 2004, revealed information about how Philippine consumers (metro Manila area) are feeling about the year ahead, which is likely to be of interest to marketers.

The BSP uses the survey to calculate several measures of different aspects of consumer expectations. These measures are combined in a variety of ways to verify predictions based on other indexes. Responses are also combined to produce an overall idea of consumer sentiment. That composite index of expectations declined for the fourth quarter with 57 percent of the 2425 respondents saying that they felt their economic situation was worse than in the third quarter. And only 8 percent said they were better off than they were a year ago.

The BSP's consumer expectations index has three components: Current family financial situation, current level of family income, and present economic condition of the country. All three of these components declined for the fourth quarter. The BSP said that expectations around the present economic condition of the country declined the most.

In other areas that will affect consumer spending patterns, consumers who were feeling gloomy about the future expressed worry about higher prices, no Government approved wage increases, no work at all, and a decrease in income. Consumers who were optimistic about the future were expecting increases in domestic and overseas income, or wages, and employment possibilities.

When asked about their feelings about the year ahead, more Philippine consumers were pessimistic than optimistic. Only 20.9 percent of survey respondents said they thought their economic situation would improve in 2005, 41.5 said things would stay the same, and 36.7 percent said they would be worse off.

Based on these consumer expectations, the BSP itself thinks spending will show a decline in the fourth quarter 2004, but will recover in the first quarter of 2005, and head upward from there to through the fourth quarter 2005. As shown on page 1, though, consumers were much more cautious when thinking about buying any type of consumer durable goods. Only 1 in 5 consumers felt secure enough about their financial situation to think seriously about buying a house, or the land on which to build a house, or any major appliances, or a motor vehicle.

Expectations in regard to durables were consistent between opinions expressed for the fourth quarter 2004, and the 12 months of 2005.

Worries about unemployment and high interest, and the health of the peso were likely responsible for the pessimism, said the BSP.

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