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Philippines: Business optimism hits high in Q4 – BSP
MANILA, Philippines — Businesses, particularly in the export sector, turned more optimistic in the fourth quarter as a result of the moderate and gradual weakening of the peso against the dollar, according to a survey conducted by the Bangko Sentral ng Pilipinas.
BSP Deputy Governor Diwa Guinigundo said the overall business confidence index of the Business Expectation Survey improved to 43.3 percent in the fourth quarter from the previous quarter’s 37.9 percent.
This was the highest since the third quarter of last year when the overall business confidence index stood at 45.4 percent. The survey was conducted from Oct. 2 to Nov. 20 with 1,473 respondents.
Guinigundo said the business outlook index of the exporters on the macroeconomy stood at 50 percent while that of importers stood at 43.8 percent
Exporters continue to benefit from the moderate and gradual depreciation of the peso against the dollar as this translates to higher sales and increased competitiveness, according to Guinigundo.
“Obviously because of the depreciation of the peso, the exporters were very happy. The exporters were very happy about the weakening of the peso,” he said.
The peso has emerged as the weakest performing currency in the region, depreciating close to three percent to hit a fresh 11-year low after breaching the 51 to $1 level. The local currency has since recovered back to the 50 to $1 level.
Guinigundo said the country’s export sector has rebounded strongly after a poor performance in the past two years
“We are in the upcycle of manufactured exports particularly electronics as well as machinery and transport,” he said.
Latest data showed exports of electronics rose 12.1 percent to $24 billion in the first nine months followed by the machinery and transport equipment with a 30.6 percent jump in dollar receipts to $4.2 billion.
Rosabel Guerrero, director of the BSP’s Department of Economic Statistics, said exporters were the most bullish, maintaining a record-high confidence level for the second consecutive quarter at 50 percent in the fourth quarter.
Overall, Guerrero said the more buoyant outlook of all respondents during the fourth quarter could be traced to the expected increase in orders and consumer purchases during the Christmas holidays, the increasing number and expansion of businesses.
She said respondents also cited higher disbursements for the government’s infrastructure and other development projects, the favorable macroeconomic conditions in the country, particularly manageable inflation and low interest rates, and the expansion of export markets and stronger demand for Philippine products.
For the first quarter of next year, business outlook turned less optimistic with the confidence index declining to 39.7 percent from the previous quarter’s 51.3 percent.
Guerrero said the less positive outlook was due mainly to the usual slowdown of demand after the holiday season, the lag in business transactions at the beginning of the year, stiffer business competition, concerns on the effect of the new excise tax rates to the automobile industry as well as higher inflation.
Respondents see inflation averaging 3.1 percent in the fourth quarter and inching up to 3.2 percent in the first quarter, well within the two to four percent target set by the BSP.
Source: http://www.philstar.com/business/2017/11/29/1763358/business-optimism-hits-high-q4-bsp