Business confidence slumps in March

The April edition of LMD reports that the LMD-Nielsen Business Confidence Index (BCI) is at its lowest point in nearly four years. The unique index shed 15 basis points in March to register 112 – a 44-month low, the leading business magazine notes. 

Nielsen’s Managing Director Sharang Pant points out in LMD that “negative sentiments have crept back in,” which is brought into focus by the share of respondents who believe that the economy will be worse off in 2017.

He elaborates: “The World Bank and IMF have commended efforts on fiscal consolidation, Fitch has revised its ratings for Sri Lanka from ‘negative’ to ‘stable,’ and special infrastructure companies are being established to oversee existing and new projects.” 

“Yet, the private sector claims that the country’s investment climate remains unattractive and is looking for policy consistency. Pressure on the balance of payments, a rising oil bill amidst the drought, issues with loan repayments and fears of currency depreciation are causing more anxiety,” he concludes.

The exclusive monthly survey reveals that 36% of respondents feel that the state of the economy will ‘get worse’ in 2017.

Where business prospects are concerned, LMD notes that more than half of the sample population are of the view that their performance will ‘remain the same’ in the coming 12 months.

The short-term outlook also appears bleak with only 24% predicting a strong quarter going forward. This number has fallen steadily in recent months, LMD observes.

Looking ahead, a spokesperson for LMD speaking exclusively to the Daily FT states: “Any hope of a mild recovery in sentiment being in the works – as we alluded to in the March edition of the magazine – has been shattered by the latest survey outcome.”

“With the ‘political culture’ being termed the most pressing national issue facing the nation at this time and ‘political interference’ taking third place among the major concerns for business, the writing is seemingly on the wall for any meaningful change in sentiment,” she adds.

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