Businesses bullish over near-term prospects

BULLISH Business confidence index for businesses in the second quarter remains buoyant although it has declined from the previous quarter. AP Photo

Business sentiment for the second quarter remains positive, although it may be less bullish than that reported the previous year.

Results of the Bangko Sentral ng Pilipinas’ Business Expectation Survey showed that the confidence index (CI) for businesses stood at +31.8 percent for the second quarter—a decline from the +47.5 percent reported in the first quarter and the +43.9 percent for the second quarter of last year.

Confidence index is the difference between the percentage of respondents who say they feel good about their financial performance and that of the overall economy, and the percentage of those who are pessimistic.

BSP Deputy Governor Diwa Guinigundo said in a briefing Thursday that the lower, yet still positive, business confidence index indicated that the economy would likely perform well at least over the short term.

He said the business confidence index was a relatively good indicator of the economy’s performance over the short term. This is because a confident business sector usually fuels higher investments which, in turn, generate more jobs and raise overall income levels.

Some of the concerns raised by the respondents for the second quarter included the political unrest in some oil-producing countries in the Middle East and North Africa. The unrest has resulted in rising global oil prices.

Respondents likewise expressed their concern over the recent disasters in Japan, which could dampen demand for Philippine exports. Japan is one of the Philippines’ largest export markets.

Despite these concerns, there remains a generally positive outlook on the economy by the business sector due to the favorable performance of the economy, Guinigundo said.