Businesses turned more bullish in the second quarter, which the Bangko Sentral ng Pilipinas said would reflect faster economic expansion than the 6.9 percent posted in the first quarter.
Results of the BSP’s latest Business Expectations Survey conducted on April 1 to May 17 showed that the overall confidence index (CI) in the second quarter rose to 48.7 percent from 41.9 percent in the first quarter. This means more businesses are optimistic about the prospects during the current quarter than in the first three months.
“Respondents were more upbeat due to the following: Election-related spending in the run-up to the May 9 national elections; sustained increase in orders and projects leading to higher volume of production; anticipated increase in demand during summer with the expected influx of both local and foreign tourists, and enrolment periods; introduction of new and enhanced business strategies and processes; expansion of businesses and new product lines, and the improving conditions in the local economy as well as in some advanced economies, particularly in Asia,” Rosabel B. Guerrero, director at the BSP’s department of economic statistics, told a press conference.
“Their more positive outlook was further driven by expectations of more favorable macroeconomic conditions in the country, particularly, low inflation and stable interest rates, and sustained foreign investment inflows,” she added.
Guerrero noted that business confidence had a high correlation with real gross domestic product (GDP) growth, as businesses planned to proceed with their expansion plans while anticipating sustained economic growth.
BSP Deputy Governor Diwa C. Guinigundo said second-quarter growth would likely be faster following the better-than-expected expansion in the first quarter.
“When business confidence in the first quarter was 41.9 percent, the GDP grew 6.9 percent. [The CI of] 48.7 percent is much higher, so if we go by correlation, we should be seeing a much higher growth rate in the second quarter,” Guinigundo explained.
He also noted that the first-quarter business expectations survey reflected “very bullish” expectations for the following quarter, hence “we should expect a more bullish economic performance in the second quarter.”
Economic Planning Secretary Emmanuel F. Esguerra said it was possible to hit a 7-percent GDP growth in the second quarter, especially as election-related spending went on full swing in the days leading to the May 9 polls.