El Niño, global head­winds sour busi­ness sen­ti­ment for Q1 2016

Business Mirror - - FRONT PAGE - By Bianca Cuaresma

BUSI­NESS sen­ti­ment soured un­der the lat­est sur­vey con­ducted by the Bangko Sen­tral ng Pilip­inas (BSP) in the first quar­ter, with busi­ness­men an­tic­i­pat­ing a dip in the econ­omy’s per­for­mance as con­se­quence of so- called lo­cal and global head­winds.

In the sur­vey, the BSP said busi­ness op­ti­mism weak­ened in the Jan­uary-to-March pe­riod, with the over­all con­fi­dence in­dex (CI) de­clin­ing to 41.9 per­cent.

This marks a sig­nif­i­cant de­crease from the 51.3 per­cent CI in the fourth quar­ter last year, when the so- called CI av­er­aged 6.3 per­cent for the quar­ter.

The CI is com­puted as the per­cent­age of op­ti­mistic firms mi­nus the per­cent­age of pes­simistic firms look­ing at the lo­cal econ­omy. A higher CI means the num­ber of op­ti­mists proved greater than the num­ber of pes­simists for the pe­riod.

The BSP re­ported re­spon­dents who held less san­guine out­look of the econ­omy on quar­ter- on­quar­ter ba­sis was due to sea­sonal fac­tors, such as the posthol­i­day slow­down in busi­ness ac­tiv­ity. The ad­verse ef­fects of El Niño on crop pro­duc­tion and on busi­nesses were also part of the sea­sonal fac­tors be­hind the drop in con­fi­dence.

Lo­cal firms were also con­cerned with the topsy-turvy ex­ter­nal sec­tor, whose volatil­ity could un­duly im­pact the lo­cal scene, in­clud­ing wor­ries on the out­look for global growth given con­tin­ued weak­ness in China and the de­cline in global oil prices and other com­modi­ties.

Busi­nesses have also adopted a wait-and-see at­ti­tude with re­gard to the out­come of the 2016 na­tional and lo­cal elec­tions.

Strong mar­ket com­pe­ti­tion and the bear­ish trend of the Philip­pine stock mar­ket also weighed rather heav­ily on their out­look in the first quar­ter.

The sen­ti­ment of busi­nesses in the Philip­pines mir­rored the less san­guine busi­ness out­look in the United King­dom, Ger­many, China and South Korea, but was in con­trast to the views of firms in the United States, Canada, France, the Nether­lands and Rus­sia. Across var­i­ous sec­tors, firms in the ser­vices and whole­sale and retail trade sec­tors were less fa­vor­able com­pared to that in the fourth quar­ter of 2015, while the sen­ti­ment of con­struc­tion-re­lated firms was steady. In­dus­trial firms, mean­while, were more buoy­ant. For the next quar­ter, busi­nesses turned more op­ti­mistic, with a CI ris­ing to 49.6 per­cent. “The next quar­ter con­fi­dence in­dex sug­gests that eco­nomic growth could be higher for the next quar­ter,” the BSP said.

Among the fac­tors that spurred the op­ti­mism of firms in the se­cond quar­ter this year in­clude elec­tion­re­lated spend­ing; sus­tained in­crease in or­ders and vol­ume of pro­duc­tion; in­crease in de­mand dur­ing sum­mer with higher in­flux of tourists; and ex­pan­sion of new prod­uct lines for the quar­ter.

Newspapers in English

Newspapers from Philippines

© PressReader. All rights reserved.