Confidence in economic opportunity among general public not picking up

Tuesday, 19 November 2013 00:37 - - {{hitsCtrl.values.hits}}

After a slight increase in optimism in September, the Perceived Economic Opportunity Index (PEOI) fell once again ending up around the lowest level since the index was developed in July 2011 when the promise of growth was significantly higher than at present. Most people are just managing to meet their household expenses but are worried about rising prices into the future, according to the Index compiler. An area of continued worry is the number of people who believe opportunities to move forward in their businesses or professions remaining very low; currently one out of six people feel opportunities have diminished. The only bright spot is the improving law and order situation where the numbers are steadily increasing. Policy makers need to take note of the continuous fall of the PEOI as an indication that confidence building measures at the ground level does not seem to be effective. Perhaps the 2014 Budget and also the highly publicised Commonwealth Heads of Government Meeting in Colombo and the hype around its business forum may increase confidence next month. The PEOI is calculated on a monthly basis using a random sample of 100 persons based on seven questions: one each on income, saving and cost of living; one each on law and order, media freedom and corruption; and one question on opportunities to advance in the respondents job, profession or entrepreneurial activity.

The answers can only have three possibilities; the current situation with regard to each issue is worse than it was six months ago, the same or better than six months ago. A score of 3 is that Sri Lankans are becoming relatively more optimistic about the emerging opportunities while 1 is they are becoming relatively more pessimistic. A score of 2 indicates no change. Therefore, the trend is a more important indicator of changing perceptions than the absolute number. The Perceived Economic Opportunity Index was developed and is measured by the Foundation for Economic Freedom in Sri Lanka. Fieldwork is carried out by market research agency PepperCube Consultants.