Philippine businesses are bullish that the country will see better days in the second quarter, supported by stable prices, more remittances from Filipinos overseas, and higher consumer spending after the May 10 polls.
The confidence index (CI) rose to 43.9 percent, up from -2.6 percent year-on-year and by 4.8 percent from the first quarter's 39.1 percent, the Bangko Sentral ng Pilipinas said in a statement Thursday.
The national survey was conducted from April 5 to May 7, with 1,632 respondents from the top 7,000 corporations' list of the Securities and Exchange Commission. The central bank said business optimism was boosted by a recovery in export revenue, moderate inflation, growth in overseas remittances, and a stable peso, stressing that higher consumer spending with the strong cash outflows following the elections would boost businesses in the coming months.
Hong Kong, Indonesia, Singapore, Germany, Italy, and the United States also recorded improved business confidence, the BSP noted.
Businesses located just outside the National Capital Region also registered a higher level of optimism than those in other regions, with expectations of favorable economic prospects and conditions in the days ahead.
Most firms engaged in exports and international trade showed the highest level of positive outlook for the second and third quarters, with the CIs reaching record levels since the survey started in the first quarter of 2007.
The services sector was the most bullish after the financial intermediation sub-sector improved its asset expansion and quality, and domestic banks remained infused with ample liquidity and solvency.
Hotels and restaurants as well as the renting, and construction sectors also expressed better outlook for the second quarter.
The sentiment in the industry and manufacturing sectors, including mining and quarrying, also improved because of higher metal prices and export growth in the electronics sub-sector.
The school opening next month has set precedents in the wholesale and retail trade sectors, which also expressed better outlook.
But the central bank said that third quarter expectations were bleaker, following the usual downtrend cycle during the rainy season, while businesses were mixed about the outlook when it comes to their own operations.
The industry and services sectors, for instance, showed a better outlook because of increased total orders and improved business activity, but the confidence level for the wholesale and retail sectors were down with the anticipated pile-up of inventory due to sluggish economic activity.
In terms of credit access, the second quarter outlook remained positive as more firms reported an increase in access to credit compared with quarter-on-quarter and year-ago levels.
Financial conditions, the BSP noted, improved but remained tight as the index stayed at -5 percent, possibly due to the easing of banks credit standards and tightening conditions of the firms loan contracts.
Despite a lower employment outlook index of 19.9 percent quarter-on-quarter, the BSP said hiring of additional employees would continue in the third quarter especially in the services sector and the renting, business activities, and financial intermediation sub-sectors.
On the downside, the BSP pointed out that weak demand and financial problems could also set in during the second quarter the same factors identified by survey respondents the first quarter of 2009.
Respondent firms expected inflation and interest rates to go up and the peso to appreciate in the second and third quarters.
The appreciation of the peso would come largely from foreign exchange inflows, including higher export receipts, overseas remittances, and foreign investments, the BSP survey showed.
