Business sentiment improved in the third quarter from the same period last year as the faster growth of the economy led to a better outlook among enterprises on their ability to generate profit.
Results of the latest Business Expectation Survey (BES) conducted by the central bank showed that the confidence index for enterprises in the country hit +42.5 percent for the third quarter of this year, better than the +34.1 percent registered in the same period last year. A positive index means the percentage of respondent-firms that felt better off in the current period exceeded the percentage of those that felt otherwise.
“In general, businesses are more bullish this year than last year. There was uncertainty last year not only because of the crisis in the eurozone, but also because of the underpending by the [Philippine] government,” Deputy Governor Diwa Guinigundo of the Bangko Sentral ng Pilipinas said in a press conference Thursday.
The latest index, however, was lower than the +44.5 percent registered in the first quarter of this year.
The quarter-on-quarter decline in the index was blamed on the slow recovery of the US economy and what was perceived to be a deteriorating condition in the eurozone, which is experiencing a sovereign debt and banking crisis.
The BSP said there was a positive correlation between the business confidence index and the growth of the economy.
Teresita Deveza, acting deputy director at the central bank’s economic statistics department, said that based largely on results of the BES for the first two quarters of the year, the Philippine economy could grow an average 6.5 percent for the full year.
The estimate was based on historical BES data showing that business confidence indices at the +40-percent levels normally came with an economic growth in the 6-percent range.
“We expect GDP [gross domestic product] growth to be in the area of 6 percent for 2012, if we follow the correspondence with results of the BES,” Deveza said in the same briefing.
The Philippine economy grew by an average 6.1 percent in the first semester, the National Statistical Coordination Board reported Thursday. This kept the government’s full-year growth target of 5-6 percent within reach, officials said. Last year, the economy grew by only 3.7 percent.
The faster growth seen so far this year was attributed to increased government spending and improved export revenues.
The latest BES covered 1,581 respondent-firms all over the country. The response rate was 74.3 percent.