MANILA, Philippines – Business confidence in the Philippines dropped to a three-year low in the third quarter due to higher cost of raw materials, and shipment issues caused by the truck ban and port congestion in Manila.
In the latest Business Expectations Survey of the Bangko Sentral ng Pilipinas (BSP), the confidence index plunged to 34.4 percent from the 50.7 percent recorded in the second quarter, the lowest since the confidence index level slid to 34.1 percent in the third quarter of 2011.
BSP attributed the decline to the seasonal lack of demand amid the rainy season, rising commodity prices, and increase in overhead costs.
The bearish outlook was also blamed on Manila’s truck ban, port congestion, and the issues surrounding the Priority Development Assistance Fund (PDAF) and Disbursement Acceleration Program (DAP).
A drop in business confidence was also seen in the United Kingdom, Canada, Germany, New Zealand, Singapore, Hong Kong, and India while a more optimistic outlook was seen in the US and China.
The survey showed less favorable outlook in the construction and industry sectors during the third quarter, while a more upbeat outlook is seen in the services sector driven by optimism in the hotel and restaurant industry.
A more positive outlook, meanwhile, is seen for the fourth quarter as the index hit 52.9 percent.
“Respondents’ more positive outlook in the fourth quarter was due to expectations of brisker business in view of the expected increase in consumer spending during the holiday season, [and] expansion in retail trade, infrastructure, power and telecommunication, education, and health care businesses,” the BSP said.
The BSP also cited “higher exports of garments and metals with the recovery global markets, and increase in orders for manufacturing products leading to higher volume of production” as factors for the confidence.
The latest poll was conducted from July 1 to August 15 and surveyed a total of 1,527 firms.