Q4 business confidence a 2-yr. high – Bangko Sentral survey

Business confidence in the Philippine economy rose to its highest level in two years during the fourth quarter, driven by strong domestic demand, results of the Bangko Sentral ng Pilipinas (BSP) Business Expectations Survey show.

The confidence index (CI) rose to 51.3 percent from 41.4 percent in the third quarter, indicating that more businesses are optimistic about the country’s economic prospects.

Respondents survey noted the expected increase in consumer demand during the Christmas season, with the main palay harvest and milling seasons slated in October to December.

Optimism was also boosted by the sustained increase in sales, orders, and projects leading to higher volume of production, the expansion of businesses and new product lines, and the introduction of new and enhanced business strategies.

Other drivers of optimism were the steady flow of remittances from overseas Filipino and election-related spending with the national polls slated next year.

“Their most positive outlook was further driven by expectations of brisker business due to the Philippine’s hosting of the Asia-Pacific Economic Cooperation (APEC) Leadership Summit, higher disbursements for the government’s infrastructure projects, and the favorable macroeconomic conditions in the country,” the BSP said.

Mirrors sentiment overseas

The latest Philippine business sentiment mirrors the buoyant outlook in Australia, Japan, and the Euro area.

The business outlook also stayed strong across sectors for the fourth quarter.

The wholesale and retail trade sector was the most bullish, driven by a robust demand for the holidays by the main harvest and milling seasons.

“Consumption is anticipated to be propped up by a favorable business environment and the steady inflow of remittances,” the BSP said.

The services sector was also more upbeat for the quarter, with hotels and restaurants posting the highest confidence index attributed to expectations of more business opportunities.

A similar trend was noted in the industry sector.

“Electricity, gas, and power supply firms were more bullish in their outlook with the increased utilization of power plants, high electricity spot prices, improved incentive program for distributors, and more projects in the pipeline for power generation and water and water waste treatment services,” the central bank said.

“Consistent with the favorable overall outlook on the macroeconomy, the outlook of firms on their business operations improved for Q4 2015,” it added.

Q1 2016 outlook

This is in contrast to the weaker business sentiment in the US, UK, China, Hong Kong, Germany, Russia, Indonesia, Singapore and India.

The outlook for the first quarter of 2016, however, dropped to 43.9 percent from the 53.1 percent on the back of the seasonal slowdown in demand following the holidays.

“The next quarter suggests that the optimists continued to outnumber the pessimists but the number of respondents with favorable views declined,” the BSP said.

The respondents also cited stiff competition, El Niño, and uncertainties in the global economy.

The next quarter is expected to be more upbeat for export businesses and less-optimistic for importers, domestic-oriented, and dual-activity firms, the central bank said. – VS, GMA News