Q2 business confidence rises to record high - BSP

Business optimism in the Philippines spiked to its highest level for the second quarter of the year, helped by the Aquino administration's plans for infratructure development, economic growth, and remittances from overseas Filipino workers, the Bangko Sentral ng Pilipinas (BSP) said Thursday. BSP Business Expectations Survey, done from Jan. 6 to Feb. 14 covering 1,630 firms across the country, showed that the confidence index reached a record 59.4 percent for the second quarter of the year. "Respondents' outlook for the second quarter turned more buoyant as the next quarter index... reached the highest reading since the business expectation survey started in the second quarter of 2001," said Rosabel Guerrero, director of the central bank's economic statistics department. The confidence index shows the percentage of firms that answered in the affirmative, minus the percentage of firms that answered in the negative with respective to their views on a given indicator. A positive confidence index indicates a favorable view. Guerrero said the confidence index declined to 47.5 percent in January-March, from 50.6 percent in October-December quarter. According to the BSP, the lower business confidence index in the first quarter was driven by seasonal post-Christmas and post-harvest slowdowns, rising prices of oil and other commodities, and disruptive weather conditions in some parts of the country. Floods have been reported in Bicol provinces and some areas of Mindanao, while other parts of the country were waterless, the BSP noted. Inflation, interest rates rising Survey respondents also see inflation and interest rates rising in the first and second quarters of the year, Guerrero said. "These expectations were due in part to price pressures arising from the increasing costs of fuel and other commodities in the global market and the strong performance of the domestic economy," Guerrero said. BSP Assistant Gov. Maria Cyd Tuano-Amador said the business sentiment survey helps the central bank craft monetary policy responses to balance price considerations against other matters to promote continued economic growth. Amador said the balance has been under constant scrutiny in recent weeks, with various economists saying the BSP had been slow in responding against the threat of inflation. "That is just labeling. We respond to country-specific factors and will not be influenced by herd thought," Amador said. The official added that the central bank is also looking at potential threats to inflation. "We will be more proactive in preventing a disanchoring of inflation." — JE/VS, GMA News