HIGHER consumer demand for various products and services as well as the reopening of the economy made businesses in the country optimistic about the next 12 months, according to the Bangko Sentral ng Pilipinas (BSP).
Based on the data, business confidence for the next 12 months rose to 61.9 percent from 46.2 percent in the last quarter of 2022.
However, the optimism of businesses was not as high as the 69.8 percent level recorded in the first quarter of 2022, as businesses expect more borrowings and higher inflation at least for the first quarter of 2023 and in the near-term.
“Business firms expressed stronger confidence in the economy for Q1 2023, Q2 2023 and the next 12 months as the overall confidence indices [CIs] during these periods significantly increased from the previous quarter’s survey result,” the BSP said.
“This means that the percentage of optimists increased and outweighed the percentage of pessimists during the reference periods,” it added.
Other reasons cited by the BSP for the rise in optimism were the increased business activities and sustained economic recovery as well as expansion and new business opportunities in health care, manufacturing, and construction subsectors.
In terms of inflation expectations, businesses said they expect inflation to breach the upper end of the national government’s 2 to 4 percent target for 2023 and 2024.
Businesses expect inflation for the first and second quarters of 2023 to average 7 percent and 6.9 percent, respectively. However, in the next 12 months, inflation is expected to be lower at 6.6 percent.
“Firms expected that their financial condition and access to credit to be less tight for Q1 2023 as their corresponding indices improved, but remained negative,” BSP said.
“The CIs [Confidence Indices] of all sectors [i.e., industry, construction, services and wholesale and retail trade sectors] increased in the first quarter 2023, suggesting a more optimistic business outlook for the current quarter,” BSP added.
The Q1 2023 BES was conducted between January 13 and March 6, 2023. There were 1,554 firms surveyed nationwide, consisting of 582 companies in the National Capital Region and 972 firms in Areas Outside the National Capital Region, covering all 16 regions nationwide.
Samples were drawn from the Top 7,000 Corporations, ranked based on total assets in 2016-2017 from the Bureau van Dijk (BvD) database.
The nationwide survey response rate for this quarter was slightly lower at 60.6 percent (from 61 percent in Q4 2022). The response rate was higher for the NCR at 61.3 percent (from 57 percent) but lower for AONCR at 60.2 percent (from 63.6 percent).
Image credits: Nonie Reyes