Metro Manila (CNN Philippines) — Despite lower-than-expected Q1 gross domestic product (GDP) growth and a sluggish stock market performance over the past several weeks, a recent Bangko Sentral ng Pilipinas (BSP) survey revealed that businesses are upbeat for Q2 2015.
The second quarter’s overall confidence index (CI) rose to 49.2% from 45.2% for the first three months of the year. The BSP said that the respondents’ increased bullishness was caused by the following factors:
robust consumer demand
increased construction activity
increased orders and new contracts/projects
expansion of businesses/launch of new product lines
continuing confidence in the Aquino administration
Such factors were also buoyed by sustained foreign investment inflows, steady remittances from overseas Filipino workers, and expectations of more favorable microeconomic conditions such as stable inflation and low interest rates.
The optimism mirrors that of positive business outlook in the U.S., Germany, Korea, and Singapore, the central bank said. The mood was less bullish in the U.K., Hong Kong, and India.
Despite staying in positive territory, the number of businesses with expansion plans in the industry sector slightly fell to 29.1% from 32.5% in the previous quarter. On the other hand, capacity utilization — the relationship between their ideal and actual output — was marginally the same at 77.2% compared to 76.8% a quarter ago.
Firms expecting thither financial conditions outnumbered those who said otherwise. However, a majority of firms also disclosed easy access to credit, despite a decline from a year ago.
Businesses generally expect inflation to increase in Q2 and Q3. However, most of them expect the rate to remain in the lower range of the 2% to 4%, at 3.2% for Q2 and 3.4% for Q3. Most of them also expect the appreciation of the peso and an interest rate increase.
