BSP survey shows increased optimism for Q4

As in recent years, optimism among businessmen in the third quarter slid compared with a quarter ago due to prospects tempered by the rainy season, although Bangko Sentral ng Pilipinas (BSP) data showed that the net confidence level at the start of the Duterte administration was the highest ever for the quarter post-elections.

Results of the BSP’s latest Business Expectations Survey conducted from July 1 to Aug. 12 showed the overall confidence index (CI) for the July-to-September period declined to 45.4 percent from 48.7 percent in the second quarter. This reflected a decline in the number of optimistic firms, which nonetheless still outnumbered the pessimists.

In a report, the BSP said the respondents’ less buoyant outlook were due to concerns that business operations might be interrupted amid the rainy season, expectations of slack in demand during the planting and closed milling seasons as well as slower sales for consumer goods as households prioritized students’ tuition at the start of classes.

Also tempering business optimism were concerns about the implementation of stricter new mining policies, which put on hold a number of mining concessions, the BSP said.

Businesses were also concerned about the closed fishing season in Davao Gulf from July to September as well as the weak global economy, according to respondents.

The BSP nonetheless noted that despite the historical decline in sentiment being recorded during the third quarter since 2012, the current quarter’s CI was the highest third-quarter reading of all time.

Rosabel B. Guerrero, director at the BSP’s department of economic statistics, also said data showed that this year’s third-quarter CI was the highest during presidential election years as “those [respondents] who indicated they were more optimistic cited the change in administration.”

The CI in the third quarter of 2010 rose to 45 percent from 43.9 percent in the previous quarter; in 2004, the third-quarter CI jumped to 30.5 percent from 19.9 percent a quarter ago.

Francisco G. Dakila Jr., BSP managing director for the monetary policy subsector, said the record-high reading for the third quarter was “consistent with the strong outlook for the economy to continue” in the remaining months of the year.

The economy grew by a robust 6.9 percent in the first half, one of the fastest growth rates in the region, on the back of sustained strong domestic demand coupled with election-related spending.

For the fourth quarter, the business outlook was more upbeat, with a CI of 56.8 percent, up from 45.3 percent in the previous quarter’s survey results, suggesting that “growth could accelerate in the last quarter of 2016.”

Businesses are more confident about prospects for the October-to-December period on expectations of higher sales amid the Christmas holiday, harvest and milling seasons, as well as increased confidence in the new administration, which earlier committed to ramp up the rollout of public-private infrastructure projects while also keeping the favorable economic policies seen to maintain stable inflation and low interest rates as well as sustain foreign investment inflows.