BSP Survey Says That Business Confidence Continues to Decrease

In contrast to the positive expectations of consumers, business confidence continues to decrease in part to the higher borrowing and inflation rates, and weak performance of the peso,  which are affecting the hiring and expansion plans for the remaining quarter of 2022 and in the next year, according to a survey conducted by the Bangko Sentral ng Pilipinas (BSP).

The third quarter survey titled Business Expectations Survey (BES) was conducted from July 6 to Aug. 15 and showed that the overall confidence index (CI) went down from 35.4% in Q2 to 26.1%. Reasons for this include the drop in the percentage of optimists and a rise in the number of pessimists.

The BSP says that business sentiment remains steady on the side of the pessimists for Q4 and 2023.

The negative business view in Q3 was because of rising inflation rates, flue prices, and a decrease in demand and sales, as well as the weakening peso, adding to the COVID-19 threats.

A recent survey showed that the majority of firms predict that the peso will further depreciate. During the conduction of the survey, the peso was ranging from ₱55-54 against the US dollar. Come September, the peso hit a new high of ₱58.50.

The BSP says that “Businesses expected the peso may continue to depreciate against the US dollar and the peso borrowing and inflation rates may rise in Q3 (third quarter) and Q4 2022, and the next 12 months,”

“Further, businesses expected that inflation may breach the upper end of the government’s 2–4 percent inflation target range for 2022-2023. In particular, firms were expecting that inflation may settle at 5.6 percent in Q3 2022 and Q4 2022 and at 5.4 percent for the next 12 months,”  they add.

Source: Manila Bulletin