BSP Survey: Businesses are more optimistic

BUSINESS has become more optimistic about the economy and its outlook, Bangko Sentral ng Pilipinas (BSP) said on Thursday, with measures for the first and second quarters of 2023 and the next 12 months improving from three months earlier.

“This means that the percentage of optimists has increased and exceeded the percentage of pessimists during the reporting periods,” the BSP said in a statement.

Total Confidence Indices (CI) for the current quarter, next quarter and next 12 months rose to 34%, 49% and 61.9% respectively from 23.9%, 31.3% and 46.2% as of December last year .

The improvement in the forecast for January-March 2023 was due to stronger consumer demand, a full recovery of the economy, business activity and a strong economic recovery, as well as expansion and new opportunities in healthcare, manufacturing and construction.

According to the BSP data, sentiment in the four main sectors – manufacturing, construction, services, wholesale and retail trade – was also more optimistic, while the outlook among trading firms was also generally more optimistic for almost all types (exporters, importers, dual activity and household orientation). The exception was exporters, whose forecasts were less optimistic.

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Capacity utilization also improved in the current quarter: in industry and construction, it rose to 74.8% from 72.1% three months earlier.

However, indicators of financial condition and access to credit remained negative, but have improved since December.

For all three periods (1/2 quarter 2023 and the next 12 months), businesses expect the peso to strengthen against the dollar.

Respondents also said inflation could pick up, surpassing the government’s 2.0 to 4.0% target for 2023-2024, but BSP said expectations could ease in the near term as fewer people saw consumer price increases pick up.

“In particular, businesses expect that inflation for the first quarter of 2023 (Q1 2023), the second quarter of 2023 (Q2 2023) and the next 12 months could average 7%, 6.9% and 6.6 %, respectively,” the Central Bank said in a statement.

In terms of sentiment in the second quarter, heightened optimism was primarily driven by expectations of increased sales, improved business activity and operations, and seasonal demand growth during the summer months.

Over the next 12 months, business confidence was also reportedly supported by the likelihood of higher demand/sales, a fully reopened economy, better business conditions and new opportunities.

By area, sentiment in the National Capital Region (NCR) for all three periods – chronologically – improved to 36 percent, 49.3 percent, and 62.8 percent, respectively, from 21.5 percent, 28.2 percent, and 45.1 percent.

For the rest of the country, the CIs were also higher at 29.9 percent, 48.3 percent, and 60.2 percent, respectively, at 28.7 percent, 37.8 percent, and 48.5 percent.

The data comes from the latest BSP Business Expectations Survey, which was conducted nationwide from January 13 to March 6. A total of 1,554 companies participated, 582 of which were in Metro Manila and 972 in areas outside of NCR. All 16 regions were represented, according to BSP.

By type of business, 68.2 percent of respondents were domestically oriented firms, 11.7 percent were importers and exporters, 10.3 percent were importers, and 4.9 percent were exporters. The remaining 5% did not specify what they do.

In terms of employment, 44.7 percent were small enterprises, 33.3 percent were medium enterprises, and 12.8 percent were large enterprises. The rest did not say how many they hired, or indicated that they did not have any workers.