Business confidence continue to be bullish in the fourth quarter of the year as the overall confidence index (CI) rose to 52.3 percent, the latest Business Expectations Survey (BES)
of the Bangko Sentral ng Pilipinas (BSP) showed.
In a press briefing on Friday, the central bank said that the overall CI in the fourth quarter was higher compared to the previous quarter’s CI of 42.8 percent.
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 given indicators.
“A positive CI indicates a favorable view, except for the inflation rate and the peso-borrowing rate, where a positive CI indicates the opposite,” the BSP explained.
The BSP said that the positive business outlook for the Philippines is “on course to remain positive” for the fourth quarter, despite the concerns over the pork barrel issue, United States government shutdown in October, and the impact of natural calamities.
“The stronger reading suggests that more businesses are optimistic about the country’s economic prospects compared to that of the previous quarter,” it stated.
The survey added that respondents’ optimism was based on the expected increase in consumer demand during the Christmas and main palay (unmilled rice) harvest seasons; more orders and projects leading to higher volume of production; expansion of businesses and new product lines; and continued demand for construction projects (public and private) augmented by rehabilitation efforts from the recent earthquake in Bohol.
The monetary authority also said that favorable macroeconomic conditions in the country, particularly low inflation and interest rates, a strong peso, higher foreign investment inflows, and the steady stream of overseas Filipino remittances also boosted business confidence in the current quarter.
First quarter 2014
For the first quarter of 2014, the BES said that business outlook turned less optimistic, with the next quarter CI declining to 40.7 percent from an all-time high of 60 percent registered in the last survey.
“This means that the optimists continued to outnumber the pessimists for the next quarter, but the number of respondents with favorable views declined relative to those who said otherwise,” it said.
The BSP noted that the respondents’ less sanguine outlook was attributed to the seasonal slack in demand after the holiday season, and the political noise brought about by the pork barrel issue. It added that uncertainties in the global economy, particularly emanating from the US as well as the euro markets contributed to respondents’ lower optimism.
Meanwhile, the survey said that importers and dual-activity firms were more bullish in the last quarter 2013 on account of the expected increase in consumer demand during the Christmas season, continuous business expansion, and new product launches as well as stable macroeconomic conditions.
“However, both importers and dual-activity firms turned less optimistic for Q1 [first quarter]2014 due to the usual slack in demand after the holidays,” it said.
On the other hand, exporters’ sentiments were steady in the fourth quarter of 2013, but turned more upbeat for the first quarter of 2014 given the seasonal increase in production.
The BES is a quarterly survey of firms drawn at random from the Securities and Exchange Commission’s top 7,000 Corporations in 2010.
BSP said that results of the survey “provide advance indication of the direction of the change in the overall business activity in the economy and in the various measures of companies’ operations as well as in economic indicators.”