The sentiment of businesses soared with significant increase in the overall confidence index for the first and second quarters of the year as well as the next 12 months, according to the latest Business Expectations Survey (BES) of the Bangko Sentral ng Pilipinas (BSP).
The results of the survey conducted from January 13 to March 6 covering 1,554 companies showed the confidence index rising sharply to 34 percent from the previous survey’s 23.9 percent.
“This means that the percentage of optimists increased and outweighed the percentage of pessimists during the reference periods,” BSP officer-in-charge for the Monetary Policy Sub-Sector Redentor Paolo Alegre Jr. said.
Alegre attributed the more upbeat outlook of respondents to expectations of: (a) higher consumer demand for products and services, (b) full reopening of the economy and return to pre-pandemic normalcy as more COVID-19 restrictions are lifted, (c) increased business activities and sustained economic recovery, and (d) expansion and new business opportunities in healthcare, manufacturing, and construction sub-sectors.
Business outlook across all types of trading firms is generally more upbeat for Q1 2023. Across different types of trading firms (i.e., exporter, importer, dual-activity and domestic-oriented), business sentiment was generally more upbeat for Q1 2023, except for exporters whose outlook was less optimistic.
The confidence indices for the second quarter and the next 12 months increased to 49 percent from 31.3 percent and to 61.9 percent from 46.2 percent, respectively.
Capacity utilization rises for Q1 2023. The average capacity utilization in the industry and construction sectors for Q1 2023 rose to 74.8 percent from 72.1 percent in Q4 2022.
Firms expect financial condition and access to credit to be less tight for Q1 2023. Firms expected that their financial condition and access to credit to be less tight for Q1 2023 as their corresponding indices improved, but remained negative.
Firms expect a stronger peso, and higher borrowing and inflation rates for Q1 2023 and the near term
For Q1 and Q2 2023, and the next 12 months, businesses expect that the peso may appreciate against the U.S. dollar and the peso borrowing and inflation rates may rise.
Although businesses expect that inflation may breach the upper end of the national government’s two to four percent inflation target range for 2023-2024, inflation expectations among businesses may ease in the near term as the number of respondents who expected higher inflation declined compared with the Q4 2022 survey results.
Particularly, businesses are expecting that inflation for Q1 2023, Q2 2023 and the next 12 months may average at 7 percent, 6.9 percent, and 6.6 percent, respectively.
