PH business confidence rises in Q2 2015 – BSP

MANILA, Philippines – Business optimism in the country’s economic prospects grew in the second quarter of 2015 from the previous quarter, based on data released by the Bangko Sentral ng Pilipinas (BSP).

The results of the latest BSP Business Expectations Survey (BES) showed that the overall confidence index (CI) rose to 49.2% from 45.2% in first quarter 2015, the BSP said in on Friday, May 29.

The BSP added that respondents’ increased confidence is due to the following factors:

• Robust consumer demand during the secondary harvest and fishing seasons, graduation and enrolment periods, and summer season given the expected influx of both local and foreign tourists
• Expected increase in activities in the construction sector, particularly infrastructure-related government projects
• Increase in orders and new contracts/projects, leading to higher volume of production
• Expansion of businesses and launch of new product lines
• Continuing confidence in the administration

Expectations on the accelerated rollout of infrastructure and other development projects under the public-private partnership (PPP) program, along with favorable macroeconomic conditions like stable inflation and low interest rates; sustained foreign investment inflows; and steady stream of Overseas Filipino Workers (OFW) remittances also further drove optimism, the survey showed.

Construction sector most confident

Among business types, importers are the most optimistic, followed by exporters. The outlook of firms that engage in both activities, however, is less upbeat.

The construction sector is the most optimistic among all sectors for the current quarter, with the CI at an all-time-high.

Firms belonging to this sector expect that the expansion of construction services would be sustained, particularly as more public infrastructure projects are implemented during the quarter.

Construction activities related to power generation are also reported to be on the rise during the current quarter.

The services sector is likewise more upbeat for the second quarter, generally on account of the expected better economic prospects in the country.

The positive outlook of the wholesale and retail trade sector stem from respondents’ expectations of a surge in consumer demand aided by low oil prices, and a favorable business climate.

Respondents in the industry sector attributed their optimism to favorable weather conditions, the onset of the fishing season, and the expected increase in electricity consumption during summer.

Damp outlook for Q3 2015

Expectations for the third quarter across all sectors is less positive due to the expected seasonal slack in demand during the rainy season.

This is with the exception of those in the construction sector whose optimism is driven by expectations of brisker activities due to the continued roll-out of government projects and new infrastructure development projects in the pipeline.

The survey results showed that respondents who expect inflation to increase for the current and next quarters outnumber those who think otherwise.

However, businesses expect the rate of increase in commodity prices to likely to remain low and within the 2% to 4% target range in 2015, at 3.2% for second quarter, and and 3.4% for the following quarter, compared to 3.9% in the previous quarter’s survey results.

Meanwhile, more respondents expect the peso to appreciate and interest rates to increase for the second and third quarters of the year.

The Q2 2015 BES was conducted from April 1 to May 13 among 1,522 firms –  606 companies in the National Capital Region (NCR) and 916 firms outside the NCR, covering all 17 regions nationwide.

The respondents were drawn from a combined list of the Securities and Exchange Commission’s Top 7,000 Corporations in 2010 and BusinessWorld’s Top 1,000 Corporations in 2013. – Rappler.com

Confident businessman image via Shutterstock