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Thursday, August 10, 2006
Businesses, consumers optimistic over RP economy despite EVAT
Both business and consumers remain optimistic with the country’s business condition in the third quarter of the year, as manifested in the results of the business expectations survey (BES) and consumers’ expectation survey (CES) conducted by the Bangko Sentral ng Pilipinas (BSP).
According to a report furnished to Sun.Star Cebu by the BSP, firms that responded to the survey are upbeat the business condition of the country will further improve next quarter.
The report cited the rise of the overall diffusion index (DI) to 23.4 percent in the first quarter of this year compared to 2.8 percent in the last quarter of 2005. The overall DI was also expected to expand to 37.2 percent in the second quarter of this year.
DI measures the net difference between firms saying business conditions are favorable and those saying they are unfavorable.
Strong peso
The BSP survey report, which involved about 673 respondents in different areas in the country, stated that the optimism of the business sector was based on the appreciation of the peso, lower interest rates and improved government fiscal position.
Businesses also expected higher sales in the summer and during the opening of the school year in June.
Other positive factors cited were the high number of tourist arrivals and higher export receipts in the second quarter of the year.
But respondents pointed out that the increase in the value-added tax rate to 12 percent, continued price hikes of oil and petroleum products, slowdown in foreign trade and the continuous political instability could dampen business sentiments.
Survey respondents also cited major business constraints, such as competition, insufficient demand for goods and unclear economic laws, which could hamper business expansion in the near term.
Improve
The CES result revealed that consumer outlook for the next quarter on the economic conditions of the country and family financial conditions also improved.
Respondents’ outlook considered factors, such as expectations of better business conditions, higher employment, lower inflation and family savings.
The consumer-respondents, however, expect reductions in expenditures on basic commodities except on food and utilities in the third quarter.
There is also an expected reduction in family purchases of products and services, communication, education, hotel and restaurant, clothing and footwear, transportation, medical care, house rent, fuel and personal care and effects.
CES is aimed to capture the economic outlook of consumers as an indication of the country’s future economic conditions. It was envisioned to complement the BES to determine both business and household economic prospects. (JBN)
For Bisaya stories from Cebu. Click here. (August 10, 2006 issue)
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