BUSINESSMEN PESSIMISTIC OVER ECONOMY -- SURVEY
Manila, Feb. 24, 2003 -- Business prospects and sentiments soured in the first three months of the year to a -3 percent that was a complete turnaround from a +16.2 percent in the final quarter of 2002.
This marked the first time that business expectations took a turn for the worse since the year now jailed President Joseph Estrada was unseated in Malacañang early in 2001. It is proof of the sad tale the Palace has spun about its management of the economy and of the sentiments of businessmen.
The negative outlook was revealed in the latest survey conducted by the Bangko Sentral ng Pilipinas (BSP) seeking to determine what businessmen thought about what has happened to the business environment and what their thoughts were about the immediate future.
“The survey showed that for the first time since the third quarter of 2001, the diffusion index became negative,” the BSP said in its report.
Other leaders of the business community yesterday also admitted that the country’s economy is suffering.
Donald Dee, president of the Employers Confederation of the Philippines (Ecop), made the admission amid the growing tension in the Middle East and the ongoing hostilities in Mindanao.
According to Dee, the government’s focus seems to be on the looming war in the region and neglected the country’s economic condition, which needs the attention the most.
“It seems that all the attention is in the impending war between the United States and Iraq and our economy is being neglected,” he told reporters in an interview.
Dee stressed that although there are some blue prints for expansion in the manufacturing sector, these are not enough because many sectors in the industry, particularly the stock market, and the importation of raw materials are experiencing a setback.
“Things are happening and its out of our control,” Dee lamented.
The BSP report traced the shift to negative territory to the souring of sentiments in the industry and construction sectors.
The business outlook variable is derived as percentage of firms with “improving” outlook minus the percentage share of firms who believe in a “deteriorating” outlook.
The BSP started this business expectation survey a few months after Estrada was unseated from the highest position in the land.
But while those in the construction and industry sectors were pessimistic about prospects ahead, wholesalers and retailers were the complete opposite, according to the survey.
Those who remained pessimistic traced their cautious stance “to the increasing threat of war between a United States-led coalition against Iraq and the corresponding rise in oil prices,” the BSP said.
The survey also tried to gauge the level of confidence among the different business sectors during the period and got mixed results.
The wholesale and retail sector improved, but only barely, to -8 percent from -7 percent. Even the industry sector, whose confidence level remained positive showed falling confidence as its index stood at 8 percent from a previous 14.2 percent.
The services sector, which includes banks and financial institutions, posted the biggest fall in confidence to -5.1 percent from previous confidence index of 8.3 percent.
So did the confidence level at the construction sector for the period, which also fell to zero percent flat from 3.3 percent previously.
The BSP said some 70 percent of the surveyed business firms cited stiff competition and lack of demand as the factors that limited production of more goods and the creation of more business activities in the first quarter.
Other factors cited were unclear economic laws, high interest rates, financial woes, lack of access to credit and finally labor problems.
The BSP noted the threat of war in the Middle East, rising oil prices, the weakened peso and the budget deficit could have influenced the various business sectors to be “less optimistic.”
This pessimism was more pronounced whenever business was asked about domestic interest rates, inflation and the exchange rate, the BSP said.
The only thing good that came out of the exercise was that business, for all its pessimism, expect the economy to be brighter in the second quarter as indicated by the business outlook index rising to 17.5 percent from 6.3 percent.
The BSP survey covered all 12 major industry groupings and respondents were drawn from among the top 3,000 firms listed by the Securities and Exchange Commission. (By Jun Vallecera and Marie A. Surbano, Tribune)
Reported by: Sol Jose Vanzi
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