LOCAL businesses were found to be more optimistic of the country’s economic prospects, despite the uncertainty brought about by the change in the seat of power in the Philippines.
The latest results of the Central Bank’s quarterly Business Expectations Survey (BES) showed business outlook on the economy was more bullish for the second quarter of this year—notably during the height of the country’s election period.
The Bangko Sentral ng Pilipinas (BSP) said the overall confidence index (CI) of firms surveyed in the country rose to 48.7 percent for the second quarter of the year, up from the 41.9 percent for the first quarter of 2016.
The CI is computed as the percentage of optimistic firms minus the percentage of pessimistic firms on the local economy. A higher CI means the number of optimists increased and continued to be greater than the number of pessimists during the period.
The central bank said respondents were more upbeat in the second quarter due to election-related spending in the run-up to the national elections, sustained increase in orders and prospects leading to higher volume of production, and the anticipated increase in demand during summer due to the influx of tourists.
The enrollment period, the introduction of new and enhanced business strategies and processes, the expansion of businesses and new product lines, and the improving conditions in the local economy, as well as in some advanced economies also helped push business sentiment up during the period.
“Their more positive outlook was further driven by expectations of more favorable macroeconomic conditions in the country—particularly low inflation and stable interest rates—and sustained foreign-investment inflows,” the central bank said.
“The sentiment of businesses in the Philippines mirrored the improving business outlook in South Korea, Canada, France and the Netherlands, but was in contrast to the deteriorating views of those in the US, the United Kingdom, Germany and China and Australia,” it added.
Across sectors, the services sector was the most optimistic among all sectors for the second quarter of the year. Construction, meanwhile, turned less favorable. The outlook of firms in the wholesale and retail trade sector, as well as industry firms, was also more upbeat for the quarter.
For the third quarter, business outlook was less optimistic due to the interruption of business activities during the rainy season, lower consumer demand as households prioritized enrollment expenses and expectations of higher oil prices.
