SURVEY SHOWS CONFIDENCE INDEX DOWN AT 39.8% FROM 45.4%

Q4 business outlook least positive in 2 yrs

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COMPANIES showed less confidence in the Philippine economy for the fourth quarter of the year—the least optimistic they have been in two years as measured by the Confidence Index (CI)—with global and domestic uncertainties clouding expectations that the Christmas season would boost domestic demand.

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Such perception will continue through to early 2017, results of the Bangko Sentral ng Pilipinas (BSP) Business
Expectations Survey (BES) showed on Friday.

The overall business CI in October to December fell to 39.8 percent from 45.4 percent in July to September.
This is the weakest CI since the third quarter of 2014, when it settled at 34.4 percent, and the first time since 2004 that the fourth-quarter survey results showed a less optimistic outlook. Fourth-quarter surveys had usually shown an uptick on the back of optimism about the Christmas season.

Outweighed by policy concerns

Francisco Dakila Jr., BSP managing director for the Monetary Policy sub-sector, said the seasonal uptick in demand was outweighed by concerns about the direction of foreign policies and economic reforms in the country, a weakening global demand, foreign exchange losses due to peso depreciation, and lack of supply of raw materials.

“It remains to be seen if the fourth quarter economic figures would actually turn out to be strong. Then there could be a deviation, because this survey was taken at a time when there was a lot of uncertainties about what could be the impact of the adjustment in the US Fed for example,” Dakila said.

The outlook is also less optimistic for the first quarter of 2017, with the CI falling to 34.5 percent from 56.8 percent.

Respondents noted the usual slowdown in consumer demand after the holiday season; the direction of foreign policies and economic reforms in the country; stiffer competition with the entry of new players in the market; and the wait-and-see attitude of investors for the coming year following the results of the US national elections, which could affect the interest rates.

The latest BES, which polled 1,470 companies nationwide, was conducted from October 3 to November 17. The survey results are considered as indicative of the direction of overall business activity.

The CI is computed as the percentage of firms that answered in the affirmative, minus the percentage of those that replied in the negative in a given indicator.

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1 Comment

  1. This is the result of so many bad news in this nation. Daily killings, political uncertainties, peso devaluation, police involved with drugs. These news does not help to increase business optimism. Trumps election is also bad for our economy. Our economy is party driven by daily news.

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