MANILA, Philippines — Businesses turned more optimistic for the next 12 months on the back of the country’s sound macroeconomic fundamentals, increase in consumer demand and higher government spending, according to the Bangko Sentral ng Pilipinas (BSP).
Fernando Salvoza, officer-in-charge of the BSP’s Department of Economic Statistics (DES), said the result of the fourth quarter Business Expectations Survey (BES) showed a higher confidence index of 59.6 percent from 58.6 percent in the third quarter.
Salvoza said respondents cited the more stable economic growth, as well as lower inflation and interest rates over the next 12 months.
He said respondents also cited the development of new product lines or models and marketing and business strategies as well as business expansion and incoming new projects, clients and prospective customers.
For the next 12 months, the outlook of dual-activity firms was more optimistic as they expect increase in demand for manufactured products, particularly activated carbon, jewelry, rubber beltings, and automotive parts, more favorable macroeconomic conditions, and new clients and projects.
However, importers, exporters, and domestic-oriented firms cited stiffer competition and concerns on the impact of potential tax reform and global concerns as reasons for their less upbeat outlook.
For the fourth quarter, positive business outlook on the economy improved, as the overall confidence index increased to 40.2 percent from 37.3 percent.
“This was reflective of the higher increase in the percentage of optimists, which outweighed the increase in the percentage of pessimists from the previous quarter’s survey results,” Salvoza said.
He said respondents attributed their more optimistic sentiment for the fourth quarter to higher consumer demand during the Christmas holidays and harvest seasons, translating to an increase in sales, orders, and projects as well as more favorable macroeconomic conditions.
According to Salvoza, respondents also cited higher government spending, mainly in infrastructure, business expansion and the anticipated positive impact of the country’s hosting of the 2019 Southeast Asian games.
The sentiment of businesses in the Philippines mirrored the more buoyant business outlook in Brazil, Chile, Hungary and the Netherlands.
Meanwhile, business sentiments in Bulgaria, Croatia, Greece, Israel, Norway, and Ukraine were less optimistic. Canada, China, Denmark, Euro Area, Hong Kong, New Zealand, Singapore, South Korea, Thailand, United Kingdom, and the US remained pessimistic.
For the first quarter, Salvoza said positive business outlook weakened as the next quarter confidence index declined to 40.3 percent from the third quarter survey result of 56.1 percent in the fourth quarter.
He said respondents’ less favorable outlook was due mainly to expectations of lower consumer demand after the holiday and harvest seasons, decline in sales and orders, stiffer competition as well as rising prices, concerns over the African swine flu epidemic and fishing ban period.