Business confidence dips in June

The latest edition of business magazine LMD reports that biz confidence fell by four basis points to 115 in June. The LMD-Nielsen Business Confidence Index (BCI) is also lower than its April score of 117 and both its 12-month and all-time averages (130). 

Nielsen’s Managing Director Sharang Pant states in LMD that “this drop was expected with inflation showing no signs of slowing down, and the floods in May severely impacting day-to-day life and business in many parts of the island.” He points out that “the availing of GSP+ in May was welcome news but it might take time for the impact to be realised in terms of growth in business orders or employment … Interest rates and currency exchange rates, however, need to be managed as a priority to improve the ease of doing business and attracting investment.”

The exclusive monthly survey reveals that 45% of respondents feel that the economy will struggle in the coming 12 months. LMD also notes that “these concerns have only grown as time has passed.”

Where business prospects are concerned, the magazine notes that sentiment appears to be rather optimistic because 43% of those surveyed believe that business will improve in the next 12 months, possibly due to expectations of GSP+-driven investments.

The investment climate in the country is ‘good’ or better, according to nearly a fifth (versus 15% in May) of Nielsen’s survey sample. 

Looking ahead, a spokesperson for LMD says: “By and large, the index has stood its ground in recent months but the latest BCI results paint a less than pretty picture of what may be in store.” 

“With the majority of businesspeople pointing to a deterioration of the economy and investment climate, the outlook for the BCI is subdued. Not even the recent cabinet reshuffle, it would seem, has helped buoy business confidence,” LMD notes.

LMD’s publisher Media Services says the July edition of the magazine will be released to bookstores and supermarkets on Friday, 7 July (for the full BCI report, go to www.LMD.lk).