Biz Optimism up for Q4 ‘17

Optimism of Filipino businessmen for the fourth quarter of 2017 rose to 43.3 percent from quarter-ago’s 37.9 percent due in part to the expected brisk business during the holiday season.

Results of Business Expectations Survey (BES) done by the Bangko Sentral ng Pilipinas (BSP) from October 2 to November 20 this year and participated in by about 1,473 firms nationwide, showed that the positive outlook for the last quarter this year is also traced to expansion of businesses.

BSP Department of Economic Statistics Director Rosabel Guerrero said in a briefing Tuesday that firms are more optimistic for the Q4 2017 as domestic demand is expected to increase during the Christmas holidays.

Other local factors that boosted businesses’ expectations include increasing number and expansion of businesses, higher disbursements for government’s infrastructure and other development projects, and favorable macroeconomic conditions.

Expansion of the exports market likewise improved outlook for businesses.

BSP Deputy Governor Diwa Guinigundo also noted that among types of business, exporters are the most optimistic for Q4 2014.

Guinigundo said positive outlook of exporters is driven by peso depreciation, which means higher revenues for them.

“We also note that because of the depreciation of peso, the exporters are also happy. If we look at the distribution of the sentiments, exporters are very happy on the weakening of the peso,” he added.

Confidence index of exporters for Q4 2017 stood at 50 percent, higher than importers at 43.8 percent, both importers and exporters at 33 percent, and domestic-oriented enterprises at 49.6 percent.

“For the quarter ahead, Q1 2018, business outlook turned less optimistic, with the next quarter confidence index declining to 39.7 percent from 51.3 percent in the previous quarter’s survey results,” Guerrero said, on the other hand.

“Respondents attributed their less positive outlook mainly to the usual slowdown of demand after the holiday season,” the official explained.

Other factors cited by the respondents are implementation of more government infrastructure projects, favorable domestic macroeconomic conditions such as low inflation environment, and expansion of exports markets and rising demand for Philippine products.

The central bank, in its report, said business sentiment in the country “mirrored the more bullish business outlook in Australia, Canada, Germany, and Indonesia, but was in contrast to the less favorable views of those in the US, UK, Hong Kong, South Korea, New Zealand and Thailand, and steady outlook in France.”

Amid this development, sentiment for the next quarter turned less optimistic, with the index down to  39.7 percent from 51.3 percent  in the quarter-ago’s survey.

The usual slowdown of business after the holidays was a major factor for the decline in the index while other reasons cited by the respondents are lag in “business transactions at the beginning of the year (e.g., delay in renewal of contracts and drydock season for the shipping industry), stiffer business competition, concerns on the effect of the new excise tax rates to the automobile industry, and higher inflation.”

Among the selected economic indicators, respondents expect inflation  to rise but remain within the government’s three to five percent target, the peso to weaken against the US dollar, and interest rates to go up.

As of last October, inflation average at 3.2 percent. (PNA)