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Businesses were slightly more optimistic for the second quarter of the year, although prospects for new hires and expansion of operations were muted, which pointed to lackluster economic growth.
Results of the central bank’s Business Expectations Survey (BES) showed a slight improvement in confidence among local companies, in line with the usual trend of rising optimism after the January-to-March period.
Strong consumer demand remained the main driver for rosy prospects for businesses, together with the expectation of a pickup in the government’s infrastructure rollout and confidence in the Aquino administration.
“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 BSP said in a statement.
For the second quarter, businesses’ confidence index rose to 49.2 percent from 45.2 percent in the previous quarter. The index is the difference between the percentage of respondents that were optimistic and pessimistic.
The sentiment of businesses in the Philippines mirrored the buoyant business outlook in the United States, Germany, Korea and Singapore. Businesses in the United Kingdom, Hong Kong and India were less bullish.
Rosabel Guerrero, head of the BSP’s economic statistics group, said the improvement in confidence in the second quarter indicated the sustained strength of the Philippine economy. “Business confidence has some statistical significance,” she said, noting that growth numbers normally track confidence levels in the business community.
“We could say that growth could be sustained but we really can’t say if it would be higher or lower,” she said.
Certain areas for concern were shown in the survey results. For instance, the number of firms that planned to increase their capacity declined. The index for business expansion declined to 29.1 percent from 32.5 percent.
Similarly, the employment outlook index, which shows how many businesses plan to hire more people, also declined to 20.7 percent from 25.6 percent the previous quarter. “This indicates expectations of an overall decrease in the number of new employees to be hired,” the BSP said.
Companies in the construction sector were more upbeat, while wholesale and retail traders were the most pessimistic.