Businessmen became more bullish in the second quarter, partly boosted by election-related spending in the run-up to the elections in May, according to the latest business expectations survey conducted by the Bangko Sentral ng Pilipinas.
The BSP said the overall confidence index in the second quarter rose to 40.5 percent from 35.2 percent in the first quarter. This indicated that the number of optimists increased and continued to be greater than the number of pessimists in the quarter.
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.
“Respondents attributed their more upbeat outlook to expectations of the usual uptick in demand during summer [in view of the foreseen increase in the number of local and foreign tourists], enrollment and harvest periods, election-related spending in the run-up to the elections in May 2019, sustained increase in orders and projects leading to higher volume of production,” the BSP survey said.
Other reasons cited were the expansion of businesses and new product lines and the continued roll-out of government infrastructure and development projects with the approval of the 2019 national budget.
“They were also optimistic that their business operations would benefit from the favorable macroeconomic conditions in the country, particularly the easing of inflation in 2019,” the BSP said.
Inflation averaged 3.6 percent in the first five months, within the Bangko Sentral’s official target range of 2 percent to 4 percent for the year.
The BSP said the sentiment of businesses in the Philippines mirrored the more positive business outlook in Canada, France, Greece, Hungary, Israel and South Korea. However, business sentiments in Brazil, Chile, the Euro Area, the Netherlands and the United States were less buoyant.
Business outlook, however, was less positive as the confidence declined to 47.6 percent from 52 percent in the previous quarter. Business optimism was dampened on the back of expectations of interruption of business activities during the rainy season and stiffer competition.
Meanwhile, another survey showed that the consumer outlook was broadly steady for the second quarter of 2019, as the overall confidence index remained negative but showed a marginal decline to -1.3 percent from -0.5 percent in the first quarter.
The latest Consumer Expectations Survey said this showed that the pessimists continued to outnumber the optimists, but the margin, while increasing slightly, remained narrow from the previous quarter.
“Respondents’ slightly weakened outlook during the current quarter was attributed to their expectations of higher prices of goods and household expenses. Concerns cited by consumers on poor health and high medical expenses as well as water crisis may have also contributed to their pessimistic sentiment,” the BSP said.
“Their negative sentiments were, however, counterbalanced by their expectations of an improvement in peace and order, additional income, availability of more jobs, good governance, and additional working family members,” it said.