PEOI: Confidence continues to sag

Saturday, 21 September 2013 01:00 - - {{hitsCtrl.values.hits}}

After a slight increase in optimism in July, the Perceived Economic Opportunity Index (PEOI) fell once again ending up among the worst-ever performances since the index was developed two years ago. Index compiler Foundation for Economic Freedom in Sri Lanka said perhaps falling growth throughout the period as well as the weakening currency and rising price level could be contributing to the negativism.

An important point to note is that the PEOI is measured relative to ‘six months ago’. This means that the continuous fall should now ring alarm bells in the offices of policy makers in order to take measures to improve the sagging confidence. However, what makes this challenge difficult is that indications, from the ‘forward looking’ questions in the survey, are that there is no upward shift in the outlook in to the near future either. 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.