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Friday, February 27, 2009

Philippines: Business sentiment cautious.

This is from Philstar.

Interesting that smaller businesses are on the whole less pessimistic than the larger ones. I suppose this is because export business in particular will see a drop in demand. Also Mindanao businesses are less pessimistic because many of them produce food which will always be in demand.



Business sentiment cautious in Philippines amid economic crisis Updated February 26, 2009 08:01 PM
MANILA, Philippines (Xinhua) - Most businesses are cautious in the first quarter of 2009, weighed down by concerns on the global economic crisis and slowdown in export growth, the Philippine central bank said today.
The overall Confidence Index slipped to -23.9 percent, the lowest-recorded level since the first quarter of 2002. Most of the 21,410 business respondents surveyed from Jan. 5 to Feb. 11 have a negative outlook, believing that the global economic turmoil will hurt both local and international markets.
Reports that export receipts are falling also weakened business sentiment. The National Statistics Office reported early this month that export earnings in December 2008 dropped by 40.4 percent to $2.672 billion on lower global demand for major exports such as electronics and textiles.
Exporters, retailers and manufacturing firms are the most pessimistic among the sectors surveyed, believing that both local and export demand will slacken further.
Philippine business owners are also concerned that they may experience some liquidity problems this year owing to an expected credit crunch, according to a survey done by the Philippine central bank.
The survey revealed that the credit access index in the first quarter slid to -12.8 percent in the first quarter of 2009.
"Respondents anticipated that the financial turmoil would make banks more risk-averse in the coming months and would likely impose stricter credit standards," the central bank said in its report.
Most business owners also reported a higher incidence of delays inpayment orders. This is why most of them expect to be less liquid in the first quarter of 2009.
The financial condition index dropped to -32.9 percent in the first three months of the year. Lean demand combined with credit tightening have also hindered planned business expansion. Only 17. 8 percent of the respondents said they plan to expand operations in the second quarter of 2009. In the first quarter of 2008, consequently, most respondents said they don't plan to hire new workers this year.
Small and medium business owners, however, are more optimistic than large-scale firms, according to the survey. Small-sized firms, which have less than 100 employees, are expecting better business environment in the second quarter. They registered a Confidence Index of 1.6 percent for the second quarter.
The central bank explained that this is because small-scale firms cater mostly to the domestic market and are less exposed to the "vagaries and downturns of global markets relative to large- sized establishments."
Companies based in Mindanao, the southern Philippines are more bullish than in other parts of the country, as most businesses there are involved in food processing and production of cash crops like pineapple and banana. Demand for food products is expected to remain steady with or without the crisis.

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