Outlook on RP economy most bullish since '01 - BSP survey

(Update 2) Business executives' outlook on the Philippine economy for the second quarter of the year is at its most bullish since 2001, the Bangko Sentral ng Pilipinas said Thursday, citing its recent survey. Lower inflation, the improved fiscal situation, increased consumer demand, lower oil prices and expectations of greater business opportunities in the run-up to the mid-term elections in May boosted business sentiments, the Jan. 15-Feb. 16 survey said. The first quarter overall business confidence index — which is the percentage of firms with positive sentiment minus the percentage of those with negative outlook — is at 44.9 percent, or almost double the 23.4 percent posted for the same period last year. "Looking ahead, respondents' outlook is even more bullish in the second quarter, with the index at 49.4 percent, hitting the highest level since the start of the survey in the second quarter of 2001," BSP Governor Amando Tetangco said in a statement. The survey showed more businessmen plan to expand their operations as they see more business activities and improved employment outlook. More respondents also reported easier access to credit. "Competition, particularly emanating from local firms, is ranked by respondents as the primary risk factor that threaten businesses in the short term," the central bank said. The survey, however, revealed that businessmen were also wary about stiff competition, insufficient demand unclear laws, labor problems and high interest rates. The BES results indicated that positive sentiments picked up dramatically compared to last year when businessmen were asked about their economic and business outlook for the first and second quarter of the year. Over a thousand business executives from the country’s top 5000 corporations took part in the survey. BSP deputy governor Diwa Guinigundo said stiff competition was a perennial problem among businessmen but he said this was the main driver for the improving efficiency in Philippine industries. "It forces enterprises to improve their competitive edge by improving efficiency and productivity," Guinigundo told reporters. According to Guinigundo, the BSP was surprised that businessmen still perceive interest rates to be high even with the historic lows in the benchmark rates but he said this could be an indication that the decline in interest rates have not trickled down. "Not all business enterprises are prime borrowers, which would have allowed them to benefit immediately and directly from the decline in benchmark rates," Guinigundo said. - GMANews.TV/AP