Business confidence lower for Q1

MANILA - Business outlook on the economy for Q1 2018 turned less optimistic while remaining positive, with the overall confidence index (Cl) declining to 39.5 percent from 43.3 percent for Q4 2017.

This indicates that the number of optimists declined but continued to be greater than the number of pessimists during the 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 respect to their views on a given indicator.

According to respondents, their less upbeat quarter-on-quarter outlook was due primarily to the following factors: (a) usual slowdown in business activity and moderation of consumer demand after the holiday and harvest seasons, (b) rising fuel prices that are largely influenced by higher international prices of crude oil and the increase in excise tax on petroleum products, and (c) stiffer competition.

Likewise, concerns cited by respondent firms over the transitory impact on consumer prices with the implementation of the Tax Reform for Acceleration and Inclusion (Train) Law may have contributed to the lower outlook, although a significant number of businesses surveyed also mentioned about the positive impact of the tax reform.

The sentiment of businesses in the Philippines mirrored the less favorable business outlook in the US, Canada, China, Hong Kong and South Korea, but was in contrast to the more bullish views of those in the UK, Australia, France, Germany, Netherlands and Thailand.

For the next quarter (Q2 2018), business sentiment improved, with the Cl rising to 47.8 percent from 39.7 percent in the last quarter's survey. This suggests that economic growth could accelerate for the next quarter.