Business sentiment up

BUSINESS CONFIDENCE recovered strongly this quarter as firms expected improvements in their operations and the macroeconomy, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

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Business confidence, as measured by the overall confidence index of the Business Expectations Survey BSP released yesterday, hit 49.5% in the October-December period. It dwarfed the 38.7% the year before and the 42.5% in the previous quarter.

It was also the second highest score notched since the survey started in 2007, topped only by the 50.6% posted in the fourth quarter of 2010, the central bank noted.

The latest survey, which covered 1,576 respondents, was conducted from October 1 to November 15.

Citing reasons for their optimism, respondents said they expected increased production due to higher orders and more projects, increased consumer demand during the holidays and the harvest season, expanded product lines and enhanced business strategies.

The stable macroeconomy also spurred confidence. Respondents attributed their optimism to stable inflation, low interest rates, strong foreign investment inflows, steady overseas remittances, possible credit rating upgrades, raised growth forecasts and confidence in the Aquino administration.

“The sentiment of businesses in the Philippines mirrored the improved business outlook in China and India, and was in contrast to the unchanged or less buoyant sentiment in neighboring countries such as Singapore, Korea, Hong Kong SAR (Special Administrative Region) and New Zealand,” the the central bank said.

By area, the rosy outlook was shared by businesses both in Metro Manila and in areas outside the capital.

By type, importers and exporters alike were more upbeat this quarter, with the former the most optimistic and the latter the most improved. But dual-activity firms — dabbling both in imports and exports — held a dim outlook, affected by the ban on fishing in the Visayan Sea and in waters off Zamboanga Peninsula and on the use of plastic bags.

By sector, services led the confidence index, followed by wholesale and retail and construction. Industry saw optimism drop.

“The business confidence should lend greater support to the GDP (gross domestic product) in the near term, particularly to investments and consumption,” BSP Assistant Governor Cyd N. Tuaño-Amador said during a press conference yesterday.

For the first quarter of 2013, business confidence fell across the board as firms were wary of the seasonal slump at the beginning of the year. The overall confidence index for the next quarter dove to 43.8% from the 59.6% the previous quarter, though it was still better than the 36.1% the year before. –Diane Claire J. Jiao, Senior Reporter, BUsinessworld