Businesses less upbeat but still optimistic - survey

MANILA, Philippines - Businesses are less upbeat this quarter but remain optimistic to close the year on a high note on the back of the country’s sound macroeconomic environment, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Results of the latest Business Expectations Survey (BES) showed over-all confidence index declined to 42.5 percent in the third quarter from 44.5 percent in the second quarter.

The confidence index is computed as the percentage of respondents who answered in the affirmative less percentage of those that answered in the negative with respect to views on specific indicators.

“Normally, if one is to look at the numbers, this is now the sixth year of the nationwide reporting of the BES. There were three years when you will see the third quarter BES results showing a dip. And three will see some improvements relative to the second quarter,” BSP Deputy Governor Diwa Guinigundo told reporters in briefing.

“This is not something that is earth shaking. This is something common for two other years,” he added.

For the fourth quarter however, firms’ confidence reached an all-time high of 59.6 percent suggesting that the “growth momentum could accelerate in the fourth quarter,” BES results showed.

Lower optimism for the current quarter was attributed to the following factors: lower seasonal demand; weather disturbances; global developments such as the eurozone crisis, sluggish US growth and China growth slowdown; volatile commodity prices; oil price expectations; and the spread of banana diseases that affected harvest in Region XI.

Optimism in the construction sector declined, while exporters were tagged the “least optimistic” for the current quarter as they worry about the lack of raw materials and volatile metal prices.

“During the rainy season construction activity shows some kind of slowdown due to obvious reasons. There was also the delay in the implementation of the PPP (public-private partnership) projects,” Guinigundo explained.

Nevertheless, the deputy governor said firms are looking forward to the months of October to December as they expect seasonal demand during the Christmas season and the run-up toward the 2013 elections to drive businesses.

Consumer spending is usually high during the holidays as Filipinos spend more for their needs and gifts, thereby allowing firms to expand production. The election season, meanwhile, is seen to boost spending as campaign period begins.

Aside from those two, firms are also positive about the expansion of businesses and new product lines, increased infrastructure spending and favorable macroeconomic conditions such as low interest rates and steady growth.

“In general, businesses are more bullish in 2012 compared to 2011... People’s confidence improved in 2012,” Guinigundo said.

A total of 1,581 businesses nationwide were polled with a response rate of 74.3 percent. The third quarter BES was conducted from July 2 to Aug. 13.