Business sentiment improved in the third quarter of the year, with the confidence index (CI) rising to 34.1 percent from 31.8 percent in the second quarter, a study from the Bangko Sentral ng Pilipinas revealed.
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.
This is the first quarter-on-quarter uptick in sentiment after two consecutive periods of decline in confidence readings since fourth quarter of last year. The higher CI in the third quarter of 2011 indicates that more businesses are optimistic about the country\\\'s economic prospects and their own operations than in the previous quarter.
Respondents cited the following factors for their more buoyant outlook:
1. Expectations of more robust demand
2. Implementation of government projects, including the Public-Private Partnership (PPP) program
3. Sound macroeconomic fundamentals
4. Business expansion arising from steady investment inflows
5. Recovery of markets in Japan
6. Introduction of new and enhanced business strategies
7. Strong confidence in the government
Their responses suggest that the challenges posed by the recent U.S. credit rating downgrade and by sovereign debt crisis issues in some parts of Europe could be countered by stronger domestic demand, higher fiscal spending, and continued growth in the private sector.
The outlook of businesses turned more bullish in the last quarter of the year. The next quarter CI at 53.9 percent was a marked improvement over the 33.0 percent index recorded in Q2 2011. This suggests that the growth momentum could accelerate in the last quarter of 2011.