BSP survey sees improved sentiment in Q2
Filipino businessmen are less optimistic about the prospects of the current quarter, due partly to an annual post-holiday slowdown activity and demand, but also due to rising prices caused by the Duterte administration’s recent tax hikes, according to a recent market poll.
At the same time, however, the Bangko Sentral ng Pilipinas’ quarterly business expectations survey showed that the local business sector remained broadly positive about the first quarter of 2018 and more optimistic about the succeeding three months.
The central bank said that the overall confidence index declined to 39.5 percent in the current quarter from 43.3 percent for the fourth quarter of 2017.
“This indicates that the number of optimists declined but continued to be greater than the number of pessimists during the quarter,” it said in a statement.
The confidence index is computed as the percentage of firms that answered in the affirmative less the percentage of firms that answered in the negative with respect to their views on a given indicator. The survey was conducted from Jan. 8 to Feb. 22, 2018. There were 1,469 firms surveyed nationwide and the survey response rate was 82.3 percent.
“According to respondents, their less upbeat quarter-on-quarter outlook was due primarily to the usual slowdown in business activity and moderation of consumer demand after the holiday and harvest seasons; rising fuel prices that are largely influenced by higher international prices of crude oil and the increase in excise tax on petroleum products, and stiffer competition,” BSP said.
“Likewise, concerns cited by respondent firms over the transitory impact on consumer prices with the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law may have contributed to the lower outlook, although a significant number of businesses surveyed also mentioned about the positive impact of the tax reform,” the statement added.
The sentiment of businesses in the Philippines mirrored the less favorable business outlook in the United States, Canada, China, Hong Kong and South Korea, but was in contrast to the more bullish views of those in the United Kingdom, Australia, France, Germany, Netherlands and Thailand.
For the second quarter, business sentiment improved, with the confidence index rising to 47.8 percent from 39.7 percent in the last quarter’s survey.
“This suggests that economic growth could accelerate for the next quarter,” BSP said.
Respondents cited as reasons behind their more optimistic outlook the usual increase in demand during summer (in view of the foreseen increase in the number of local and foreign tourists); enrollment and harvest periods as well as the anticipated higher levels of household disposable income as the TRAIN law takes into effect.
Businesses also expected an increase in government infrastructure spending with the “Build, Build, Build” strategy of the administration and higher tax revenues due to the higher tax levies; the expansion of businesses, new projects and investment opportunities, and continued product development, new product lines and enhanced marketing strategies.
The sentiment of businesses across trading types was mixed for the first quarter.
The outlook of exporters, importers and domestic-oriented firms was less favorable for the current quarter, but the outlook of dual-activity (both importer and exporter) firms were more optimistic.
For the second quarter, the outlook of firms across trade groups improved.
