Business confidence on downtrend — poll

Business sentiment is on a downturn with the periodic confidence index of the Bangko Sentral ng Pilipinas (BSP) at 31.8 percent in the second quarter from 47.5 percent in the previous quarter and 43.9 percent a year ago.

The confidence index is the sum of optimists against pessimists among 1,625 firms surveyed from last April 1 to May 10.

The BSP, in a statement, attributed the weakening confidence in the business sector to negative external developments and higher oil prices.

The BSP’s 2011 second quarter business expectations survey (BES) also showed the outlook for the third quarter also posted lower figure of 33 percent, compared to the 59.4 percent in the previous quarter and the 46.3 percent in the second quarter of 2010.

BSP department of economic statistics (DES) director Rosabel Guerrero said the country’s macroeconomic fundamentals as well as strong investment inflows and seasonal uptick in demand continue to feed confidence to remain in the positive territory.

She said respondents with positive outlook remained higher than those with negative outlook although their numbers declined compared to the previous quarter and year-ago level.

She said the respondents cited high oil prices, the political tensions in some countries in the Middle East and North Africa as well as natural disaster in Japan as reasons for their reduced optimism.

“They also cited some domestic constraints to the business environment that contributed to their weaker sentiment, namely, higher operational costs as well as slow business procedures and fund disbursement for government construction projects,” she said.

Respondents belonging to the construction sector posted the highest optimism for the quarter on back of the government’s public-private partnership (PPP) initiative.

However, the report said “respondents’ views were weighed down by the slow disbursement of funds for infrastructure projects under the PPP scheme, the rationalization of other government programs in an effort to bring down costs and create savings, as well as the increasing costs of building materials.”

BSP Deputy Gov. Diwa Guinigundo, during the same briefing, said that although respondents cited negative factors against the government’s infrastructure program “it’s very difficult to say that the business community is getting impatient.

“Maybe at this point they expect that government expenditures will result in higher level of economic activity,” he said.

He also said growth of the economy will be supported by the businesses as indicated by their plans to continue expanding operations as well as hiring more people.

He also said the respondents expect easier access to credit, which he stressed is “considered to be a positive impetus to growth.”

On selected economic indicators, the report said businessmen expect the peso-dollar rate to favor the local unit and inflation and interest rates to go up for the quarter as well as the next quarter.