BUSINESS sentiment in the second quarter of 2013 registered an all-time high level buoyed by the election period.
Data released by the Bangko Sentral ng Pilipinas (BSP) Thursday showed that confidence index for the Business Expectation Survey (BES) rose to 54.9 percent, way better than the previous quarter’s 41.5 percent and year-ago’s 44.5 percent.
The second highest index under the survey was posted in the last quarter of 2010 at 50.6 percent and the third highest is in the last quarter of 2007. These indices were registered during election years, BSP deputy governor Diwa Guinigundo said in a briefing.
“It’s a normalized result considering the impact of elections two weeks ago. We also had elections in 2007 and 2010 but the business sentiments then were not as high as this latest survey,” he said.
The survey, done from April 1 to May 10, received an 83 percent response rate from 1,554 firms nationwide that are included in the Securities and Exchange Commission’s (SEC) Top 7,000 corporations in 2010.
Aside from election-related factor, respondents also attributed the more positive sentiment to business expansion, new product lines, and additional real estate-related projects and seasonal demand due to the summer and harvest seasons, BSP Department of Economic Statistics (DES) director Rosabel Guerrero said during the same briefing.
Guerrero said the credit rating upgrades from the three major debt watchers also contributed to the improvement of business sentiment.
The country is now an investment grade economy after Fitch Ratings and Standard & Poor’s Ratings Agency (S&P) upgraded their ratings on the Philippines in March and May of this year, respectively.
Among the three major credit rating agencies, only Moody’s have not raised the domestic economy to investment grade but it currently rates the country a notch below investment grade.
The central bank, in a statement, said improvement of the business sentiment in the country “mirrored the bright business prospects in the US, UK, Singapore, Hong Kong SAR, and South Korea,” it said.
It also pointed out that this development is “in contrast to the weaker outlook of those in Canada, Germany, New Zealand, and India.”
Despite the positive business sentiment, the respondents identified several challenges to business, namely domestic competition and insufficient demand.
Among the selected economic indicators, the respondents see inflation to settle at the lower end of the three to five percent target band this year, the peso to strengthen against the dollar until the third quarter, and interest rates to further decline. PNA
