Business Confidence Sinks to 3-year Low

The result of the BSP’s business expectations survey for the third quarter showed the overall business confidence index declining 37.9 percent from 43 percent in the second quarter, according to Marriel Remulla, deputy director of the BSP’s Department of Economics Statistics.

MANILA, Philippines - Business confidence plunged to its lowest level in three years as businessmen turned less optimistic in the third quarter due to seasonal factors, the weakening of the peso against the dollar as well as the declaration of martial law in Mindanao after the Maute group laid siege to Marawi City last May.

The result of the BSP’s business expectations survey for the third quarter showed the overall business confidence index declining 37.9 percent from 43 percent in the second quarter, according to Marriel Remulla, deputy director of the BSP’s Department of Economics Statistics.

This was the lowest since the third quarter of 2014 when the confidence index reached 34.4 percent.

“This means that the number of optimists declined but continued to be greater than the number of pessimists during the quarter,” Remulla said.

He said the respondents of the survey conducted from July 3 to Aug. 18 cited seasonal factors such as the slowdown of business activities during the onset of the rainy season, the slack in demand during the planting and milling season as well as the closed fishing season in Davao Gulf.

The respondents also cited the Marawi crisis that led to the declaration of martial law in Mindanao, affecting mobility in the region.

The survey showed that business optimism was also dampened by the weakening of the peso, rising prices, stiffer competition as well as the damage and power outages caused by the earthquake in the Visayas.

The economy grew 6.5 percent in the second quarter from 6.4 percent in the first quarter.

For the fourth quarter, Remulla said business outlook turned more positive as the confidence index rose to 51.3 percent from 42.7 percent in the previous quarter’s survey results.

The more optimistic outlook was traced to the uptick in consumer demand during the Christmas season, the continued roll-out of infrastructure and other development projects as well as the continued increase in orders and projects translating to higher volume of production.

Remulla said respondents also cited the positive impact of the proposed tax reform program being pursued by the Department of Finance.

BSP managing director Francisco Dakila said the respondents expect inflation at 3.1 percent for the third quarter and 3.2 percent in the fourth quarter, but remaining within the two to four percent target set by the BSP.

SOURCE:  The Philippine Star