THE Bangko Sentral ng Pilipinas (BSP) released its Business Confidence Survey for the first quarter of 2015. The index fell to 45.2 percent from 48.3 percent.
The BSP in their media release uses the term ‘business optimism’ to distinguish from those respondents that are ‘pessimistic’ in their quarter-to-quarter outlook. The index results indicate that the number of optimists declined but continued to be greater than the number of pessimists during the quarter.
The BSP said that part of the reason for the decline is ‘seasonal’ in that there tends to be a drop after the increased business activity during the Christmas season. Further, the BSP highlighted concerns about the port congestion, effects of past typhoon damage, and Indonesia’s new and stricter limits on fishing in their territorial waters.
However, results in this Business Expectations Survey for the second quarter of 2015 are more positive with the index moving from 58.2 percent from 43.1 percent in the last survey.
Some of the internals showed that businesses believe that inflation will remain low and that commodity price increases will also stay in the 2 percent to 4 percent range. Overall, the responding firms expect better financial conditions and easy access to credit and that their own fanatical condition will improve.
The headline print of the index is what gains the attention but we wonder if ‘optimism’ versus ‘pessimism’ is actually of much value. The pessimists tend to be looking at what has happened in the past while the optimists seem to be looking at the future. Further, by its own admission, the BSP survey shows ‘mixed results’ across industry sectors which seems reasonable.
The normal business cycle, when not interfered with by external forces, would be inclined to favor one sector over another at any given time. But in the longer term, this should balance out again without interference. Unfortunately, government is usually the interferer as with the mining industry.
Yet we wonder of how much value this survey actually is to bit the businesses and policy makers.
The problem with the delays in delivery cargo to and from the Manila ports had been a problem for much of 2014 but appears to be coming to an end. While there will be other logistics problem as the World Bank pointed out with the truck ban during the preparations for the 2015 Asia-Pacific Economic Cooperation meetings, this probably not a long term systematic issue. Bad weather causing financial damage is always going to be part of the Philippines business environment.
We would be more interested as to the overall business confidence a year from now.
However, every business owner and operator knows, that confidence or the lack thereof in what happens in the outside world is not as important as the confidence he or she has in the their own confidence to adjust to the externals. That is what creates success.