Business confidence remains bullish

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Business confidence remains favorable in the third quarter of the year despite the less upbeat overall confidence index (CI), the recent Business Expectations Survey (BES) of the Bangko Sentral ng Pilipinas (BSP) said.

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The overall confidence index was lower at 42.8 percent compared to the all-time high of 54.9 percent recorded in the second quarter of 2013 survey.

“The business sentiment of the respondents continues to be broadly bullish, there was some slight decline in the confidence index, but in general it remains in a positive territory. And therefore the bullishness that we saw in the first and second quarter continued through the third quarter,” BSP Deputy Governor Diwa Guinigundo said in a press briefing.

The BES noted that “the lower but positive CI indicates that the number of optimists declined but continued to be greater than the number of pessimists during the quarter.”

Respondents attributed their less buoyant outlook to the expectations of lower seasonal demand during the quarter; stiffer competition, particularly from products from China; and volatility in the movement of the peso.

“Uncertainties in the global economy such as the impact of the anticipated exit from quantitative easing in the US also contributed to their lower optimism,” it stated.

The survey also said that the sentiment of businesses in the Philippines mirrored the weaker outlook in Hong Kong, South Korea and India, but was in contrast to the more favorable sentiment of businesses in the US, United Kingdom, Canada, Germany and New Zealand.

Furthermore, the BES indicated that the business outlook for the fourth quarter of 2013 turned more bullish.

All-time high

It showed that the fourth quarter index rose to an all-time high of 60 percent, suggesting that “the growth momentum could accelerate in the last quarter of 2013.”

The positive outlook of the respondents was because of the expectations of brisker business during the Christmas season; the continued increase in orders and projects leading to higher volume of production; and expansion of business and new product lines.

The survey noted that the prevailing favorable macroeconomic conditions such as low interest rates, manageable inflation, steady growth of overseas Filipinos’ remittances, increase in investment inflows and the investment grade credit rating from three rating agencies also boosted business confidence for the next quarter.

The BES is a quarterly survey of firms drawn at random from the Securities and Exchange Commission’s top 7,000 corporations in 2010.

The 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.”

Meanwhile, it explained that 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 given indicator.

“A positive CI indicates a favorable view, except for the inflation rate and the peso-borrowing rate, where a positive CI indicates the opposite,” it stated.

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1 Comment

  1. Bullish economy will only be sustained if the present Govt will be dead serious in running after the company of corruption who put the Govt money into limbo. Investors confidence will be shaken and nervous. Good Govt spending and proper accounting lead to transparency and added more positive outlooks.