Perceived Economic Opportunity Index: Confidence dips in Feb.

Thursday, 13 March 2014 00:39 - - {{hitsCtrl.values.hits}}

The slight increase in the Perceived Economic Opportunity Index (PEOI) for January was once again short lived with a dip experienced in February, according to its compiler Foundation for Economic Freedom in Sri Lanka (FEFSL). “Notwithstanding positive developments in the macroeconomic framework and also new and expensive infrastructure coming on line; both roads and railways, the sentiments of the people have not turned optimistic,” FEFSL said.

“The continued slow growth in credit to the private sector in the face of significantly lower interest rates compared to a year or so ago only confirms this pessimistic outlook. Perhaps the Geneva human rights issues and the possible negative economic fallout could also be weighing on the minds of people, even though not measured. The Provincial Council elections later this month could also be a negative factor. Be that as it may, an improvement in the confidence level is a must for greater investment and the fact that the index has not been able to cross the threshold of 2 for a long period is a serious concern,” FEFSL added. 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 PEOI was developed and is measured by the Foundation for Economic Freedom in Sri Lanka. Fieldwork is carried out by market research agency PepperCube Consultants.