Businesses show confidence in Q4 but not for 2012 Q1

Business confidence showed an improvement for the final quarter of this year as the Bangko Sentral ng Pilipinas’ (BSP) periodic survey’s confidence index (CI) rose to 38.7 percent from 34.1 percent the previous quarter.

For the initial quarter of next year, business outlook, however, turned less optimistic, with the next quarter CI declining to 36.1 percent from 53.9 percent in the previous quarter.

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 a given indicator.

The index’s rise indicated more businesses are optimistic about the country’s economic prospects compared to the previous quarter.

Respondents cited the following factors for their improved outlook: seasonal increase in consumer demand during the Christmas and harvest seasons, implementation of government projects, including the public-private partnership (PPP) program, sound macroeconomic fundamentals, business expansion arising from steady investment inflows, introduction of new and enhanced business strategies, and the steady stream of overseas Filipinos’ (OFs) remittances.

Local business sentiment fared better compared to those of other developed economies, such as in the US, Germany, Singapore, Hong Kong and New Zealand, whose outlook was dampened by the sluggishness in the US economy and the debt crisis in the Eurozone.

Meanwhile, similar to the Philippines, businesses in Korea and India were more upbeat in the current quarter.

This is due in part to the weak global economy, geo-political tensions in the Middle East and North Africa (MENA) region, residual effects of the natural disasters in Japan and Thailand, and seasonal factors. Moreover, the damage due to typhoons and other weather disturbances in the country, especially to crops and businesses, was expected to result in higher prices of basic commodities and loss of household and business income.

Sentiments of businesses in last quarter improved in Areas Outside NCR (AONCR) while remaining broadly steady in the National Capital Region (NCR). For Q1 2012, sentiments in the NCR and across all regions in the AONCR except in Region XI, turned less optimistic compared to a quarter ago.

Firms engaged in international commodity trading were less upbeat. The less upbeat outlook of exporters and dual-activity firms outweighed the bullish sentiments of importing firms. For the next quarter, outlook of firms across all trade groups was less favorable.

By employment size, small- and medium-sized firms were more favorable in their outlook while the outlook of large-sized firms was broadly steady. Going forward, the outlook of firms for Q1 2012 across all employment sizes turned less upbeat, with large-sized firms being the least optimistic.

The more buoyant business outlook was broad-based as business sentiment improved across all sectors — except for the services sector.

The less favorable sentiments of the financial intermediation, business activities, and community and social services sub-sectors outweighed the more bullish outlook of the hotels and restaurants sub-sector.

For the next quarter, however, business confidence softened in all sectors. –Daily Tribune