Business outlook up in Q2 – survey

Business confidence rose to 49.2 percent in the second quarter from 45.2 percent in the previous three months as local firms expected strong consumer demand, increase in activities, and the launch of new projects.

“This indicates that more businesses are optimistic about the country’s economic prospects for the second quarter of the year compared to that in the previous quarter,” the Bangko Sentral ng Pilipinas (BSP) said yesterday.

The latest Business Expectations Survey showed that respondents

expect “robust consumer demand” during the second quarter because of harvest and fishing seasons, graduation and enrollment periods, and the summer season that would increase local and foreign tourist arrivals.

Local firms also cited foreseen increase in activities in the construction sector especially government infrastructure projects and also a hike in orders from new contracts that is expected to lead to higher volume of production.

The BSP added that respondents also expect to expand their businesses with the launch of new product lines with the sustained confidence in the Aquino administration.

“The more positive outlook was further driven by expectations of more favorable macroeconomic conditions in the country, particularly stable inflation and low interest rates, sustained foreign investment inflows and the steady stream of overseas Filipinos’ remittances,” the central bank said.

The sentiment of Philippine businesses was the same as those in the US, Germany, South Korea, and Singapore. However, it was in contrast to the less optimistic outlook in the United Kingdom, Hong Kong, and India.

The BSP survey showed that businesses in the construction sector were the most bullish during the second quarter as the government accelerated spending on public infrastructure projects.

The services sector was also upbeat during the period due to the rosy prospects of the economy, while the wholesale and retail trade sectors were optimistic due to expected surge in consumer demand during summer.

Firms in the industry sector were also positive in the second quarter as they cited favorable weather conditions, the start of the fishing season, and a foreseen climb in power usage during the summer.

For the next quarter, the confidence index settled at 47.3 percent, reflecting the respondents’ less optimistic outlook.

Local businesses cited the rainy season, the planting season, heightened market competition, and lower consumer demand as households focus on education expenses.

The latest BES, conducted from April 1 to 13, surveyed a total of 1,522 firms.