Business
Q2 2017 business
outlook very
favourable
I
t was a very favorable business outlook on the
economy for Q2 2017, thanks to the overall confidence
index (CI) rising to 43 percent. This was up from 39.4
percent for Q1 2017, living proof that more businesses
are optimistic about the country’s economic prospects
for the second quarter of the year compared to that
a quarter ago. The confidence index is computed
as the percentage of firms that answered in the
affirmative less the percentage of firms that answered
in the negative with respect to their views on a given
indicator.
The following factors for their more optimistic outlook
cited by the respondents were: (a) anticipated increase in
demand during summer (due to the expected arrival of local
and foreign tourists), enrolment and harvest periods, (b)
increase in orders and production volume, (c) expansion of
businesses and services in tandem with new product lines and
promotions, (d) introduction of new and enhanced business
strategies and processes, and (e) inflows of investments with
the continuing trust in government leadership. Their more
positive outlook was also driven by expectations of higher
disbursements by the government on infrastructure and
other development projects, and brisker business due to the
Philippines’ hosting of the 30th Association of Southeast Asian
Nations (ASEAN) Leaders’ Summit.
The sentiment of businesses in the Philippines mirrored the
improved business confidence in Hong Kong, South Korea,
Canada, France, Germany, and Netherlands but was in contrast
to the weaker outlook of those in the US, UK, Thailand, and
New Zealand.
For the quarter ahead (Q3 2017), business outlook was
less optimistic. The next quarter CI at 42.7 percent was lower
56
than the 47.2 percent in the previous survey. According to
respondents, seasonal factors were behind their less upbeat
outlook, given the expected interruption of business activities
during the rainy season, and lower consumer demand
as households prioritize enrolment expenses over other
expenditures.
Both domestic-oriented and international trading firms are
more optimistic
Business confidence increased across business types (i.e.,
domestic-oriented, importing, exporting and importing-
exporting firms) for Q2 2017. For the quarter ahead (Q3 2017),
the sentiment of dual-activity firms improved. However,
outlook was slightly less positive for exporters, importers and
domestic-oriented firms.
Business confidence across sectors is broadly optimistic
Consistent with the overall outlook on the macroeconomy,
business sentiment was more positive across sectors for Q2
2017. This is with the exception of the manufacturing and
electricity, gas and water sub-sectors, whose views turned less
favorable. For the next quarter (Q3 2017), the outlook across
sectors was less buoyant due to the expected slack in demand
during the rainy season.
Firms in the services sector were the most optimistic for Q2
2017. Financial intermediation posted the highest confidence
index given the expected increase in bank transactions due
to robust domestic demand, surge in purchasing power
of agricultural households during the harvest season,
expected interest income from additional consumer loans
as well as better business prospects given the positive
impact on the economy of the Philippines’ hosting of the
ASEAN Leaders’ Summit in April 2017. The transport, storage
and communications sub-sector was also bullish due to