Businesses in the Philippines were optimistic about the economy and their ability to generate profits in the first quarter, citing expectations that overall demand for their goods would increase as export markets improve and as domestic demand remained strong.
This was according to the Bangko Sentral ng Pilipinas, which released Thursday results of the Business Expectation Survey for the first quarter showing that the business confidence index stood at +40.5 percent.
A positive index means that the percentage of respondents who said they were optimistic exceeded the percentage of those who said they were pessimistic.
“On the basis of the results of this survey, we may expect economic growth for the first quarter of this year to be higher than those in previous quarters,” BSP Deputy Governor Diwa Guinigundo said Thursday in a briefing.
He said past data showed that there was a close correlation between business sentiment, which influenced actual investments, and economic growth.
The latest index was higher than the +38.7 percent registered for the fourth quarter of 2011, but lower than the +47.5 percent for the first quarter of last year.
Rosabel Guerrero of the BSP’s economic statistics department said in the same briefing that businesses were upbeat in the first quarter due to various favorable factors such as rising orders from foreign buyers, favorable economic fundamentals, prospects of improved credit ratings for the Philippines and commitment of the government to increase public spending, among others.
Expectations that demand for Philippine exports would improve this year were anchored partly on projections that the US economy, which is recovering very modestly from its recession since 2009, was improving as shown by rising employment and home sales.
Guinigundo also said projections that inflation would remain benign this year would help support consumer spending, which could be favorable to businesses.
The government expects the economy to grow 5 to 6 percent this year, faster than last year’s 3.7 percent.