Traders still optimistic about growth prospects

Businessmen in the country are optimistic that they will continue to generate healthy revenue while the economy remains firmly on its growth track, according to the Business Expectation Survey (BES) for the third quarter.

Monetary officials said these indications should help the country attain its expansion target for the year.

In the survey, the confidence index for enterprises stood at +34.1 percent for the period. A positive index means that respondents who are optimistic about prospects ahead outnumber those who believe otherwise.

The index for the third quarter was an improvement from the +31.8 percent registered in the second quarter. Still, it was lower than the +45 percent recorded in the third quarter of last year.

The year-on-year drop in the index was attributed to problems abroad, which affected the performance of the domestic economy.

These problems included the weakened economies of the United States and parts of Europe, the export markets for developing countries like the Philippines.

The improvement of the index on a quarterly basis was traced to rising consumer demand, the recovery of the Japanese economy from natural disasters that hit the country earlier this year, and the favorable macroeconomic fundamentals of the Philippines, among others.

“The higher index in the third quarter [compared with that in the second quarter] indicates that more businesses are optimistic about the country’s economic prospects and their own operations,” the Bangko Sentral ng Pilipinas said in a report.

The BSP released the latest Business Expectation Survey Thursday.

Teresita Deveza, BSP acting deputy director, said in a briefing Thursday that the impact of the US credit rating downgrade on Philippine business sentiment still had not been incorporated in the results of the survey.

This is because bulk of the responses to the survey were gathered in July, or before ratings agency Standard & Poor’s downgraded the triple A grade of the United States by a notch.

Deveza said the downgrade of the US rating could have an impact on business sentiment especially because the United States is a big export market for the Philippines and is home to many overseas Filipino workers, whose remittances help fuel consumption of Filipino households.

Nonetheless, the BSP does not see the impact of the US rating downgrade to be significant.

Also, there are favorable factors expected to counter the adverse impact of the US rating downgrade on the Philippines, BSP Assistant Governor Ma. Cyd Tuaño-Amador said. These include the strengthening of domestic demand, higher public spending by the government, and rising investments by the private sector, which should help boost overall growth of the economy.