Economic pessimism is very common

The disbelief of Bangko Sentral ng Pilipinas (BSP) governor Benjamin Diokno that the Filipino people could be predominantly pessimistic about the economy — in reaction to last week’s SWS July 3-6, 2020 survey report, “40% of adult Filipinos expect the economy to worsen in the next 12 months,” www.sws.org.ph, 9/9/20 — betrays his unfamiliarity with economic optimism surveys, including the surveys of the BSP itself.

In 86 SWS national surveys about expectations for the economy, from 1998 to 2020, optimism was dominant 33 times, and pessimism was dominant 30 times. In the other 23 surveys, the percentage of optimists minus that of pessimists was between -9 and +9 points, or zero, more or less. The SWS term for this range is mediocre. It is applicable to July 2020, when 30 percent were economic optimists and 40 percent were economic pessimists, or net -9 (correctly rounded).

Economic pessimism prevailed in 8 of 11 SWS surveys in the time of Joseph Estrada, and in 28 of 36 SWS surveys in the time of Gloria Arroyo. In Estrada’s time the net score fell to as low as -38 (extremely low). In Arroyo’s time it reached the all-time low -50 (execrable), in May 2005.

Filipinos turned predominantly optimistic about the economy starting with the presidency of Benigno Aquino III, when all 24 SWS surveys gave positive net scores; the minimum was +2 (June 2014), the maximum was +56 (excellent, in June 2016). All net scores were likewise positive in the first 14 SWS surveys under Rodrigo Duterte, until the end of 2019. The net -9 of July 2020 is the first negative; previously, the lowest optimism was +11 (fair, September 2018), and the highest was +44 (excellent, September 2016).

The SWS surveys tally very well with the BSP’s Consumer Outlook Surveys. The best evidence supporting the SWS surveys of economic optimism is that of the BSP itself; this will be crystal clear when we put a comparative chart in the SWS webpage.

The BSP had 24 Consumer Outlook Surveys in Arroyo’s time, with the first 10 done in the National Capital Region only, and the next 14 done nationwide. (Although the national sample is a prodigious 5,000 households, the BSP only breaks down the survey figures into NCR and Areas Outside NCR. Former BSP governor Nestor Espenilla once asked me if more geographical detail was possible; I assured him that the sample was adequate.)

The reports of the BSP surveys also subtract the pessimists from the optimists, in the same way that SWS does. In the 24 surveys of Arroyo’s time, 21 gave pessimistic net scores, between -7 and -53. Of the three optimistic scores, the highest was only +7 (April 2010).

Then economic optimism dominated, in 21 of the 24 BSP surveys done in the time of Aquino III, with a peak of +52 (July 2010). In the three pessimistic exceptions, the worst was merely net -7 (April 2011).

Economic optimism continued in all the 15 BSP surveys under Mr. Duterte. The net score peaked at +68 (July 2016); its worst was +7 (July 2018). It was at +19 (January 2020), when the BSP series was discontinued due to the pandemic. The BSP and SWS surveys confirm each other, so I hope the BSP series restarts soon.

Economic pessimism affects other anxieties. This week, SWS reported another finding of its July 2020 survey: “Filipinos fearing ‘the worst of the COVID-19 crisis is yet to come’ rise to 57%,” www.sws.org.ph, 9/15/20. The average fear of 57 percent consists of a great 72 percent fear among those expecting the economy to worsen, a majority 60 percent fear among those expecting it not to change, and a minority 39 percent fear among those expecting the economy to improve.

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