Business sentiment upbeat in Q2, cool in Q3

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MORE companies are optimistic about the Philippine economy this second quarter of 2015 given the expected robust consumer demand, strong construction sector, higher volume of production, and business expansions, but sentiment is likely to turn less upbeat in the third quarter with the onset of the rainy season.

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The overall business confidence index (CI) for the second quarter climbed to 49.2 percent from 45.2 percent in the first quarter of 2015, results of the quarterly Business Expectations Survey (BES) released by the Bangko Sentral ng Pilipinas (BSP) on Friday show.

For the third quarter of 2015, the business outlook remained optimistic at 47.3 percent, although lower than the 58.2 percent in the preceding quarter.

The index is calculated as the net of the percentage of companies that answered in the affirmative and the percentage of firms that answered in the negative with respect to their views on given indicators.

The survey said the respondents attributed their more upbeat outlook on robust consumer demand during the secondary harvest and fishing seasons, graduation and enrollment periods, and summer season given the expected influx of both local and foreign tourists.

The respondents also expect increases in activities in the construction sector, particularly infrastructure-related government projects, as well as, in orders and new contracts and projects that leads to higher volume of production.

Expansion of businesses and launch of new product lines were also anticipated, while the confidence in the current administration continued to be favorable.

“Their more positive outlook was further driven by expectations of macroeconomic conditions in the country (particularly, stable inflation and low interest rates), sustained foreign investment inflows and the steady stream of overseas Filipinos’ remittances,” the survey added.

Less bullish on Q3
On the other hand, the survey said respondents for the quarter ahead were less bullish as they see interruptions of regular business activities during the rainy season and lower output during the planting season, which leads to lower trade activities.

Increased market competition with the establishment of new businesses that could hurt existing small- and medium-scale businesses; and lower consumer demand as households prioritize enrollment expenses, were also noted.

The BES is a quarterly survey of firms drawn at random from the Securities and Exchange Commission’s top 7,000 corporations ranked in 2010 and Business World’s Top 1000 Corporations in 2013.

The survey was conducted between April 1 and May 13 among 1,522 firms nationwide.

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