Businessmen are generally optimistic about their prospects for the second and third quarters of the year, indicating a rise in economic activities and investments in infrastructure.
The Bangko Sentral ng Pilipinas (BSP) said yesterday that its recent Business Expectation Survey (BES) showed possible business expansion and a hike in employment in the next months before the onset of the holiday season.
The quarterly BES indicated that the confidence index of business enterprises remained strong at 46.4 percent for the second quarter, although it also showed the index will be four points lower at 44.7 percent in the third quarter.
According to BSP deputy governor and officer-in-charge Diwa Gunigundo, more firms were indicating expansion in their activities in the coming two quarters.
“More economic activities are expected to happen – not only for this quarter, but also the third quarter,” Gunigundo said. “Even with our concerns over excess liquidity, if business is robust and bullish, that extra liquidity would be absorbed and, therefore, won’t have to be inflationary.”
Culled from over 1,076 business executives picked from the top 5,000 corporations in the country, the BES revealed the highest diffusion rates since the survey was first conducted in 2002.
Gunigundo said survey respondents in all sectors expect the economy to be better in the second quarter compared to last year.
He said the optimism is widespread across the industry, services, wholesale, retail and construction sectors.
“The people we surveyed said they have a better outlook because of a generally stable macroeconomic environment,” he said.
Other factors include the expected economics expansion in Asia, the increase in business opportunities during the election and an increase in spending due to the resumption of classes.
“Elections create some uncertainty but businessmen saw opportunities arising from the political exercise,” Gunigundo said.
He also said survey results indicated that the business sector saw competition as the biggest constraint in the coming two quarters, as well as insufficient demand, which could also lead to low sales.
The BES results also indicated that positive sentiments picked up dramatically compared to last year, when businessmen were asked about their economic and business outlook for the third quarter, although they were somewhat more toned down than the expectations for the second quarter.
Gunigundo said the diminished optimism for the third quarter stemmed from the cyclical slowdown in consumer spending due to the onset of the rainy season.
According to the survey, expectations were mixed for the third quarter, with all sectors generally remaining optimistic, except for construction, which is the most heavily affected sector during the rainy season.
The survey indicated that the construction sector was even more optimistic about its third quarter projects despite the usual decline brought by the wet season.
“Real estate and infrastructure are observed to be mushrooming as developers take advantage of the heightened demand in the property market,” Gunigundo said. “So construction is even more optimistic compared to other sectors.”