Business more bullish on outlook in Q2

The country’s businessmen appeared to be more bullish on the economic outlook in the second quarter, based on the latest expectations survey conducted by the Bangko Sentral ng Pilipinas (BSP).

The BSP’s Business Expectations Survey (BES) found that the overall confidence level rose to 49.2 percent against the last quarter’s (end-March’s) 45.2 percent. It was conducted before the announcement that the country’s gross domestic product (GDP) expansion slowed down markedly to 5.2 percent in the first quarter of 2015 from 6.6 percent in the previous quarter.

The BSP cited the following reasons for the improved outlook: strong consumer demand due to harvest and fishing seasons as well as school spending on graduation and enrollment; increases in infrastructure-related activities and the construction sector; higher volume of production; business expansion; and confidence in the Aquino government.

On top of these positive factors, the BSP also mentioned the continued favorable economic outlook on the back of stable inflation and low interest rates, foreign exchange inflows from remittances and foreign direct investments.

Inflation, for example, is expected to remain low, consistent with that of the BSP’s official target of two percent to four percent inflation rate for this year and in 2016. Businesses also see the peso vis-àvis the US dollar appreciating in the third quarter while they think interest rates will increase as well.

The BSP noted that the optimism seems to extend to the next quarter but sentiments were more cautious due to the rainy season, lower trade activities and increased market competition.

Generally, it is the construction sector that displayed the most optimistic outlook for the third quarter but the number of business with expansion plans – other than those in the construction sector – has decreased. Still, majority of businesses think their access to financing is good and they are confident of easy availability of credit should they require it.

The latest survey was conducted April 1 to May 13 and covered 1,522 companies belonging to the top 7,000 corporations as listed by the Securities and Exchange Commission.