Biz confidence continues to head south

Friday, 12 February 2016 00:00 - - {{hitsCtrl.values.hits}}

January’s LMD-Nielsen Business Confidence Index (BCI) reflects an ongoing erosion of corporate sentiment, the latest edition of leading business magazine LMD reports.

The BCI shed six basis points last month, following the budget amendments, to register a 12-month low of 151.

“The previously anticipated ‘New Year euphoria’ hasn’t quite come through, as far as business confidence is concerned,” LMD notes, adding that “this is also well short of its 12-month average of 161. Even more telling is the year-ago comparison, which reflects a massive fall of 43 basis points, from when the nation voted to install a new President.”

Nielsen’s Managing Director Shaheen Cader explains, in LMD, that “the decline is despite past revenue being good,” and that “businesses are concerned mainly about an economic slowdown, the depreciation of the rupee (pushing up prices) as well as an increase in negative sentiment about business performance in the next few months.”

As for the economy, less than half of the survey respondents feel it would pick up over the next 12 months, while 36% think the status quo would be maintained and 20% anticipate a worsening economic climate.

A spokesperson for LMD’s publisher Media Services says that “despite relatively lower levels of optimism across the corporate community, a majority of 52% believe that business will be better over the coming 12 months.”

The pioneering magazine notes that the index may well stagnate, or even dip, as there is little to be cheerful about on the policy front. But it adds that “the only saving grace would be if the mega development projects that are ready to roll out generate a buzz about Sri Lanka’s competitive standing in the region, together with enhanced FDI prospects.”

Media Services says that LMD will be released to bookstores and supermarkets on Friday, 12 February (for the full BCI report, go to www.LMD.lk).