Business optimism continues to pick up

MANILA, Philippines - For the fourth straight quarter, local businessmen remained optimistic of economic prospects amid growth concerns in the US and the sovereign debt crisis in Europe, a survey conducted by the Bangko Sentral ng Pilipinas (BSP) showed.

The central bank’s Business Expectation Survey (BES) for the second quarter of 2012 showed that the business confidence index improved to 44.5 percent in the second quarter of the year from 40.5 percent in the first quarter.

BSP assistant governor Cyd Tuano-Amador said in a press conference that this was the fourth consecutive quarter that the business confidence index improved.

“The BES has edged again higher and this is the fourth consecutive quarter that business confidence continued to remain bouyant,” Amador stressed.

After dropping for two consecutive quarters to 31.8 percent in the second quarter of last year from 47.5 percent in the first quarter and the record level of 50.6 percent in the fourth quarter of 2010, the confidence index steadily improved for four straight quarters to 34.1 percent in the third quarter of last year, to 38.7 percent in the fourth, to 40.5 percent in the first quarter of the year and to 44.5 percent in the second quarter.

The confidence index is computed as the percentage of firms that answered in the affirmative less the percentage of firms that answered in the negative with respective to their views on a given indicator.

Teresita Deveza, acting deputy director of the BSP’s Department of Economic Statistics (DES), traced the continued optimism of businessmen to the increase in orders and new contracts leading to higher volume of production as well as expansion in businesses and new product lines.

Deveza also cited higher government spending, seasonal uptick in demand during the summer, enrollment, and harvest seasons as well as favorable macroeconomic fundamentals.

“Also contributing to businesses’ improved sentiment were the prevailing favorable macroeconomic conditions such as lower interest rates and manageable inflation as well as the steady growth of remittances that contributes to healthy external payments position,” she said.

The Cabinet-level Development Budget Coordination Committee (DBCC) expects the gross domestic product (GDP) expanding between five percent and six percent this year due to higher government spending under the Public Private Partnership (PPP) scheme of the Aquino administration.

The GDP growth slackened to 3.7 percent last year from 7.6 percent in 2010 due to weak global trade, resulting in a sharp drop in the country’s export earnings, as well as the underspending by the Aquino government.

The survey also showed that less respondents expect inflation to go up but more respondents expect the peso to appreciate due to robust remittances from the overseas Filipino workers (OFWs) and robust receipts from business process outsourcing (BPO) sector.

The survey conducted between April 2 and May 11, had 1,587 respondent firms from the Top 7,000 corporations of the Securities and Exchange Commission.