The usual knee-jerk reaction of the business community to political controversies now appears to be a thing of the past. When before expansion plans are put on hold and new businesses are deferred each time there are political uncertainties, the second half of the year showed otherwise. Our business community appears to have matured, judging by the way its members are showing bullishness amid the threat of more controversies.

This much can be gleaned from the results of a survey conducted by the Bangko Sentral ng Pilipinas (BSP) among 1,047 firms listed on the Top 5,000 Corporations of the Securities and Exchange Commission. The survey, conducted from October 8 to November 9, sought to gauge the “business expectations” for the fourth quarter of the year, and the first quarter of next year. The BSP noted that business sentiment remained strong for the last quarter of the year, and for the first quarter of 2008 those surveyed saw positive signs of growth in all sectors. The growth expectations were expressed despite the controversies that erupted in the third quarter of the year.

The BSP’s findings also showed a new reality insofar as business was concerned: we are now able to distinguish between what entertains us and what brings food to our table. Politics fulfills the former; economic activities ensure the latter. The knee-jerk reactions to the antics of politicians that dampen business plans no longer seem to be there, perhaps because those in business have realized that the economy is not only strong but resilient; defiant, even.

In the past, the business sector’s reaction to political noise had always been instantly negative. And the first to take the hit had been the peso, the stock market and overall investor confidence. Not anymore. This year’s experience tends to show that we have gone over that previous trend, and that the business sector is now impervious to political noises. As we said, the economy has shown resiliency amid the major controversies that rocked the country during the last three quarters.

Firms in the top 5,000 that responded to the survey, according to the BSP, “expressed strong confidence that the economy would continue to improve in the fourth quarter, as the confidence index went up by more than 7 index points.” This reinforces the growing body of evidence that delinks economic activity from political noise. The optimism of the business sector that the economy would post substantial gains in the coming quarters is borne out by positive indicators on all fronts of economic activity.

We understand that the respondents attributed their optimism to the following factors: generally stable macroeconomic environment evidenced by low inflation rate, stable interest rates and appreciating peso; pickup in demand with the approach of the Yuletide; higher OFW remittances; the harvest season; increase in foreign investments; and new and enhanced business strategies. These positive indicators show that the outlook remains vibrant, the economy resilient and the mood festive.

With the confidence index computed at 48 percent, the BSP said this is the second-highest level recorded since the third quarter of 2006.The BSP survey also revealed a pervasive sense of confidence on all corners of the business sector, particularly the services sector, the confidence index of which went up 60.3 percent from a year ago due mainly to a brisk business outlook for hotels and restaurants and in anticipation of higher sales during the coming holidays.

The retail-trade sector and the industry sector indices were also higher than their respective year-ago levels. The BSP study also revealed the businessmen are wary of the possible shakeout in the US economy due to the housing and credit crises and the unabated increase in crude-oil prices. This was, however, offset by the findings in the survey that large-sized firms, defined as those with 500 or more employees, were the most optimistic on the economy, with the index at 53 percent in the fourth quarter of 2007 and 44.4 percent in the first quarter of 2008.

There is also wide expectation that the peso would remain strong in the fourth quarter. This particular hope has been beefed up by the recent return of the peso exchange rate to the $1-to-P42 range last week. It will be recalled that it was $1 to P44-plus when the political controversies unfolded at the start of the second semester. It has since gone up considerably vis-à-vis the dollar.

While it is expected that politicians will continue to push controversial issues to the limelight between now and the balance of the year, notably the ZTE controversy and the resurrected behest loans issue against Speaker Joe de Venecia Jr.’s Landoil firm, the prevailing view is that after the First Sunday of Advent in the Catholic Church calendar, the political noise will give way to the festive Christmas season.

The good news is that both Houses of Congress will go on recess starting the 17th of December. And by that time, the public will be more focused on meeting the social obligations that come with Christmas. But even if our politicians succeed in escalating controversies during the holiday season, whatever new or rehashed issues are raised, Filipinos are confident the economy, with its remarkable resilience, will be able to withstand them. 

E-mail: hugagni@yahoo.com

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