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Businesses generally more optimistic for 2023 — BSP survey

Business firms in the Philippines were more confident for 2023 citing higher consumer demand as the country returns to pre-pandemic normalcy, a survey conducted by the Bangko Sentral ng Pilipinas (BSP) revealed.

Results of the Business Expectations Survey (BES) found that the Overall Business Outlook Index for the current quarter stood at 34%, higher than the 23.9% in the previous quarter, and 32.9% in the first quarter of the previous year.

The latest survey was conducted from January 16 to March 6, and was computed as the percentage of firms that responded affirmatively less than those that answered in the negative in terms of their overall business outlook.

The higher confidence index (CI) was attributed to higher consumer demand for products and services, the full reopening of the economy and return to normalcy, increased business activities, and the expansion and new business opportunities in healthcare.

The higher trend was seen in most of the country, particularly in Metro Manila, Ilocos, the Cagayan Valley, Central Luzon, Calabarzon, Central Visayas, Eastern Visayas, and the Davao region.

“The anticipated increase in sales of consumer products and demand for education and tourism services were some of the factors that buoyed firms’ sentiment of higher spending that will spur business activity,” the BSP report read.

The CI declined in the Bicol Region, Western Visayas, and the Zamboanga Peninsula, and turned negative in Soccsksargen.

“The outlook of firms in said regions was tempered by high inflation and interest rates, unfavorable business conditions, and supply shortages of consumer goods,” the report said.

Headline inflation clocked in at 8.6% in February, slower than the 8.7% print in January, but core inflation accelerated to 7.8% from 7.4%.

The Monetary Board of the BSP has already hiked key policy rates by 425 basis points since May 2022, with the latest being a 25-basis point increase that took effect on March 23 to bring the benchmark rate to 6.25%.

The same survey found, however, that the CIs of firms on their own business operations — based on business activity and total orders booked — declined as consumers were expected to adjust their spending after the holidays.

The outlook on the volume of business activity was less buoyant across all sectors, but was steady in the construction sector.

The overall business sentiment also grew for the next quarter, with the CI up to 49.0% from 31.3% in the fourth quarter, and 59.7% in the same quarter of 2022.

“With the full reopening of the economy due to the easing of pandemic restrictions, respondents’ more optimistic outlook for the next quarter was attributed primarily to expectations of higher volume of sales, improved business activities and operations, and seasonal uptick in demand over the summer months,” the BSP said.

For the next 12 months, the CI increased to 61.9% from 46.2% in the previous quarter, but was lower than the 69.8% recorded in the comparable period of the past year.

“The respondents’ more buoyant business confidence for the next 12 months was also attributed to their optimism about higher demand/sales, a fully reopened economy, better business conditions, and new business opportunities,” the report read.

The BES is a quarterly survey conducted by the central bank, taking into account responses from the list of Top 7,000 Corporations in the country based on total assets.—AOL, GMA Integrated News