Local firms in the country gained renewed confidence in the Philippine economic prospects for the last three months of the year owing largely to the increase in consumer demand during the quarter, coupled with the expectations of higher businesses, the harvest season and new product offerings during the period.
In a briefing on Friday, the Bangko Sentral ng Pilipinas (BSP) reported that the overall business confidence index (CI) of Philippine businesses rose to 48.3 percent for the fourth quarter of the year, after turning sour in the third quarter of the year at 34.4 percent.
This is the largest CI gain in a single quarter for the survey since the first quarter of 2010.
The CI is the measure of sentiment in the central bank’s business expectations survey (BES). A higher positive CI means that the number of optimists outnumbered the number of pessimists for the period at a larger margin. A negative CI, meanwhile, means that the number of pessimists exceeded the number of optimists during the period.
The latest BES—as conducted by the central bank every quarter—showed that respondents turned more upbeat on the country’s economic activity in the last quarter of the year due particularly to the expected increase in consumer demand during the holidays and main palay harvest seasons, the sustained increase in orders and projects leading to higher volume of production, the expansion of businesses and new product lines, and the introduction of new and enhanced business strategies and processes.
“Their more positive outlook was further driven by expectations of an acceleration in the rollout of infrastructure and other development projects under the Public-Private Partnership (PPP) Program and the favorable macroeconomic conditions in the country, particularly stable inflation and low interest rates, sustained foreign investment inflows and the steady stream of overseas Filipinos’ remittances,” the central bank added in its statement.
The significantly more positive outlook during the period was seen across all sectors, as well as all economic sizes and locations.
Tracking the national trend, the sentiment of businesses in both the National Capital Region (NCR) and Areas Outside the NCR both turned more optimistic during the period—with the businesses with main offices in the NCR having more confidence than those outside Metro Manila.
Similarly, firms across all employment size were more upbeat in their outlook for the fourth quarter of the year—with large firms having the most bullish outlook in the fourth quarter.
In terms of sectors, the wholesale and retail-trade sector was the most bullish for the October-to-December period, due largely to the expected seasonal pick up in demand because of the holiday season.
The services sector, construction firms and industry firms’ outlook turned more upbeat during the period, as well.
Optimism was also seen in the outlook of international trading firms in the country.
For the next quarter, however, sentiment dipped slightly to turn less optimistic, but still positive at 43.1 percent CI.
“Respondents attributed their less sanguine outlook for the first quarter of 2015 to the typical downturn in demand after the holiday season. Other reasons cited by firms were concerns over the backlog in deliveries caused by the port congestion problem and a looming power crisis as well as uncertainties in the global economy, particularly emanating from Europe and Japan,” the BSP said.