Business Optimism Continues To Pick Up

It was showed in a survey conducted by the Bangko Sentral ng Pilipinas (BSP) that for the fourth straight quarter, local businessmen remained positive with economic prospects despite growth concerns in the US and the sovereign debt crisis in Europe.

From 40.5 percent in the first quarter, it was showed by the central bank’s Business Expectation Survey (BES) that for the second quarter of 2012 the business confidence index improved to 44.5 percent in the second quarter of the year.

Cyd Tuano-Amador, BSP assistant governor, mentioned and stressed in a press conference that this was the fourth consecutive quarter that the business confidence index has improved.

“The BES has edged again higher and this is the fourth consecutive quarter that business confidence continued to remain bouyant,” Amador said.

After dropping for two consecutive quarters to 31.8 percent in the second quarter of last year from 47.5 percent in the first quarter and the record level of 50.6 percent in the fourth quarter of 2010, the confidence index steadily improved for four straight quarters to 34.1 percent in the third quarter of last year, to 38.7 percent in the fourth, to 40.5 percent in the first quarter of the year and to 44.5 percent in the second quarter.

The confidence index is composed and computed as the percentage of firms that answered in the affirmative less the percentage of firms that answered in the negative with respective to their views on a given indicator.

Acting deputy director of the BSP’s Department of Economic Statistics (DES), Teresita Deveza, outlined the continued optimism of businessmen to the upsurge in orders and new contracts leading to higher volume of production as well as widening in business and new product lines.

Deveza also mentioned that higher government spending, seasonal upstick in demand during the summer, enrollment, and harvest seasons as well as favorable macroeconomic fundamentals.

“Also contributing to businesses’ improved sentiment were the prevailing favorable macroeconomic conditions such as lower interest rates and manageable inflation as well as the steady growth of remittances that contributes to healthy external payments position,” she said.

The Cabinet-level Development Budget Coordination Committee (DBCC) expects the gross domestic product (GDP) expanding between five percent and six percent this year due to higher government spending under the Public Private Partnership (PPP) scheme of the Aquino administration.

The GDP growth slackened to 3.7 percent last year from 7.6 percent in 2010 due to weak global trade, resulting in a sharp drop in the country’s export earnings, as well as the under spending by the Aquino government.

The survey also showed that fewer respondents expect inflation to go up but more respondents expect the peso to appreciate due to robust remittances from the overseas Filipino workers (OFWs) and robust receipts from business process outsourcing (BPO) sector.

The survey was conducted between April 2 and May 11, 2012 that had 1,587 respondent firms from the Top 7,000 corporations of the Securities and Exchange Commission.

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Remittances in May were up 3.7 percent from a year ago and brought total inflows in the first five months to $6.98 billion, up 2.8 percent from the same period last year.

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The BSP has reduced its policy rates by a total of 200 basis points since December last year to bring down borrowing costs and encourage economic activities.

BSP Deputy Governor Diwa Guinigundo told reporters that the BSP had no clear indications of how the economy performed in the second quarter but prospects appear better for the second half of the year.


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No recession in RP, BSP says

Gov’t managers pin hopes on remittances, BPO.

MANILA, Philippines – Amid persistent conerns that the Philippines is headed for a slump this year—fueled by the surprisingly disappointing growth in the first quarter—the Bangko Sentral ng Pilipinas stressed that the economy would not slide into a recession.

“There will be no recession,” BSP Governor Amando Tetangco Jr. said Friday when asked if the Philippines would follow the lead of its neighboring economies that had already contracted.

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The business expectations survey (BES), which is conducted every three months by the BSP had never turned positive since it was first conducted in the second quarter of 2001.

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The Central Bank made the reaction after the Paris-based Organization for Economic Cooperation and Development (OECD) has included the Philippines in a list of countries that are not doing enough to clamp down on tax cheats.

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By now, those who have been following the congressional hearings and court cases on the Legacy Group mess are aware of how its owner, Celso delos Angeles, allegedly misused depositors money leading to the collapse of 12 rural banks and 3 pre-need firms.

In an attempt to save their necks, Delos Angeles’s alleged accomplices—Namnama Pasetes-Santos and Carolina Hiñola—on Monday testified before the senators how Delos Angeles siphoned depositors’ money to finance his extravagant lifestyle and to pay off government officials for protection.

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Punongbayan & Araullo serves as the bank’s external auditor.

Subsection X162.2b of the Manual of Regulations for Banks of the Bangko Sentral ng Pilipinas states that universal and commercial banks will be fined P1,200 for every business day of delay of submission of their financial statements.

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The BSP has slashed its key overnight borrowing rate — the rate at which the central bank pays banks for short-term deposits — by a total 100 basis points in December and January to 5.0% at present, and analysts are expecting more as inflation continues to ease.

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