RP ECONOMY PICKING UP, DEFICIT REMAINS MAJOR CONCERNS: SURVEY
MANILA, February 18, 2005 (STAR) (AFP) - Philippine companies expect the economy to pick up from the second quarter, but rising inflation and a chronic fiscal deficit remain major concerns, a central bank survey showed Friday.
Most of the companies polled by the central bank said they believed the economy would be "improving significantly in the second quarter of the year," according to the Business Expectations Survey.
The survey polled 900 of the country's top 5,000 corporations.
"The improving outlook indicates the respondents' more positive expectations on business and economic performance for the second half of 2005," central bank governor Rafael Buenaventura said in a statement.
Buenaventura said those polled in the metropolitan Manila area "registered more optimistic business expectations" while those outside the region said they expected some "deterioration" before an improvement.
They attributed the improvement in sentiment to an increase in domestic and international demand, a stronger peso, fiscal reforms by the government and an increase in tourist arrivals, among others factors.
Buenaventura said the majority of those polled also projected an "increase in the volume of business activity" in the first quarter and even "brisker business activity" in the second quarter.
However, he noted that respondents also reported a slight decline in credit access due to higher interest rates and "continuing cautious bank lending activity."
Other major concerns included high oil prices, rising inflation and a chronic fiscal deficit.
The release of the survey came in the same week that deadly bomb attacks struck Manila's financial center and two cities in the south, killing 12 and wounding scores of others, and a devastating two-notch downgrade of the country's sovereign credit ratings by Moody's Investors Service.
Moody's had cited Manila's huge government and external debts, which it said exposed the government to shocks despite fiscal reforms being pushed in Congress.
Reported by: Sol Jose Vanzi
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