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The local businesses complained about rising prices and higher taxes for the third quarter of the year. With the bleak prospects given recent economic developments such as inflation, higher tax, food crisis and continued price hike of the basic commodities.
This is manifested in July to September Business outlook on the economy this year, with the quarterly Business Expectation Survey (BES) of the Central Bank showing the overall confidence index (CI) of firms during the period slumped to 30.1 percent—the lowest level of business confidence since the first quarter of 2010!
The confidence index is computed as the percentage of firms optimistic on the local economy minus the percentage of pessimistic firms.
The firms surveyed during the period complained of increasing prices of basic commodities in the global market, augmented by the effects of the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law on prices of domestic goods.
All of these are attributed to the rising overhead costs and lack of supply of raw materials, as well as seasonal factors such as interruption of business activities and lower crop production during the rainy season, slack in consumer demand as households prioritized enrollment expenses, as well as the suspension of commercial fishing in Davao Gulf from June to August.
Another factors that cannot be discounted is the weakening peso and stiffer competition during the period augmented their weaker sentiment in the third quarter of the year.
Across sectors, the wholesale and retail trade sectors are the ones that are greatly affected and have biggest decline in confidence. For the importers, they were affected largely by lower consumer demand during the rainy season, while businesses involved in exporting activities expressed concerns over the disruption in normal operations, resulting from annual plant overhauling and port congestion issues, as well as reduction in export orders.
Construction firms, on the other hand, were less optimistic due largely to the slowdown in construction activities during the rainy season, as well as increasing costs of components like fuel and spare parts and maintenance of machinery. However, others remain hopeful for the next quarter as local firms expect higher consumer demand during the holiday and harvest seasons which would result to increase in orders and projects, expansion of businesses and new product lines, continued roll out of government infrastructure and other development projects, more favorable weather conditions for agricultural products, and opening of high seas and fishing operations in October.