Businesses’ outlook on the economy continued to be favorable in Q1 2013, with the overall confidence index at 41.5 percent, a press release from the Bangko Sentral ng Pilipinas said.
The confidence index is computed as the percentage of firms that answered in the affirmative less the percentage of firms that answered in the negative with respect to their views on a given indicator. The current quarter’s CI was lower, however, compared to the 49.5 percent CI recorded in the Q4 2012 survey, the press release said. This is a typical downturn in business outlook during the first quarter of the year, it added.
The lower CI indicates that the number of optimists declined but continued to be greater than the number of pessimists during the quarter.
Respondents attributed the less upbeat quarter-on-quarter outlook to a typical slowdown in business activity after the Christmas, the main rice harvest seasons and adverse effects of Typhoon Pablo on crop production and other businesses in Mindanao, and strong market competition.
The sentiment of businesses in the Philippines mirrored the less sanguine business outlook in the UK, France, Singapore and Hong Kong SAR, and was in contrast to the more buoyant views of those in South Korea, India and Germany.
For Q2 2013, business outlook turned more optimistic, with the next quarter CI rising to 56.4 percent, the press release said. Respondents cited a brisker business due to election-related spending and anticipated increase in demand during the secondary harvest season, graduation/enrollment periods as well as during the summer season due to the expected rise in tourism (both local and foreign).
Business expansion, new projects and new/improved product lines is also among the cited reasons for the upbeat outlook.
Businesses were also of the view that the country’s strong macroeconomic fundamentals like stable prices and exchange rate, good governance and expectations of an investment grade credit rating for the Philippines will do good for their operations, the press release said.*