Firms' confidence at its highest this quarter

Business confidence leaped to a record high this quarter, as firms turned optimistic due to election spending, recent investment grade ratings and the harvest season, a new Bangko Sentral ng Pilipinas survey showed. In the release of the latest Business Expectations Survey, overall confidence index remained in the positive territory this quarter at 54.9 percent, the highest since the BSP first released the survey in the first quarter of 2007. Businessmen attributed their positive sentiment on brisker businesses, new product lines and additional projects due to election spending, said central bank director Rosabel Guerrero. She noted that the seasonal uptick in demand during the summer and harvest seasons stoked expansion in businesses. “They were also optimistic that their business operations would benefit from the country’s strong macroeconomic fundamentals and investment grade credit rating from three agencies,” Guerrero said. The country received an investment grade rating from Fitch Ratings and Standard & Poor’s ratings services, while Japan Credit Rating Agency hiked the Philippine sovereign rating to two notches above investment grade. But the central bank survey showed that firms are less optimistic for the next quarter, with the confidence index falling to 46.2 percent. Guerrero said this was due to a projected “slowdown in demand from a high base during election period… [and] interruption of regular business activities during rainy season.” Central bank deputy governor Diwa Guinigundo said business confidence is usually at its highest in the fourth quarter of an election year. “I’m still positive on this. One should look at the broader macroeconomic picture – back then we didn’t have consecutive quarters of strong growth and years of current account surpluses,” he said.   The confidence index is computed as the percentage of respondents who answered in the affirmative less the percentage of those who answered in the negative with respect to their views on specific indicators. The survey was conducted on April 1 to May 10, with 83 percent of 1,554 sampled firms nationwide. — BM, GMA News