Businessmen turned less optimistic in the third quarter, following the implementation of the first package of Tax Reform for Acceleration and Inclusion law and the increase in prices of basic commodities in the global market, results of a Bangko Sentral ng Pilipinas survey show.
The quarterly Business Expectations Survey showed that business optimism, as measured by confidence index, declined to 30.1 percent in the third quarter from 39.3 percent in the second quarter.
Bangko Sentral Deputy Governor Diwa Guinigundo said the third-quarter result was the lowest since the first quarter of 2010. The index is measured as the difference between the percentages of optimistic and pessimistic respondents.
Results of the survey identified the reasons for the sluggish outlook for the period, including the rising overhead costs and lack of supply of raw materials; the impact of the rainy season to business operations and crop production; lower consumer demand as households prioritized enrollment expenses and the suspension of commercial fishing in the Davao Gulf from June to August.
Respondents also noted the weakening peso and stiffer business competition.
Businesses, however, are more upbeat for the next quarter, with the business confidence index rising to 42.6 percent from 40.4 percent, suggesting that growth maybe sustained in the fourth quarter of 2018.
Among the reasons for the rosy outlook were the expected uptick in demand during the harvest and holiday seasons, continued increase in orders and projects, expansion of businesses, continued rollout of government projects, more favorable weather conditions for agricultural products and opening of high seas fishing operations in October.
Respondents in the National Capital Region and areas outside NCR were both less optimistic in the third quarter. For the next quarter, outlook improved in the NCR and remained steady in areas outside NCR.
Respondents also expected the peso to depreciate, inflation to increase and interest rates to go up for the current and next quarters.
The survey was conducted on July 2 to Aug. 29 and covered 1,466 firms nationwide.
