Perceived Economic Opportunity Index improves in March

Monday, 29 April 2013 02:05 - - {{hitsCtrl.values.hits}}

The Perceived Economic Opportunity Index (PEOI) recorded a slight yet welcome increase for March after falling for three consecutive months. The index compiler, Foundation for Economic Freedom in Sri Lanka (FEFSL) said the uptick to 1.64 comes after the index registered its lowest point of 1.56 in February.

“Without any significant ‘bad news’ on the economic front and with traditional April holiday shopping taking place during the first week of April when the survey was conducted and perhaps also buoyed by the fact that the currency having appreciated; the fall in optimism seemed to have taken a breather,” FEFSL said.

“The question now is whether this uptick is a temporary phenomenon or if it is taking on a new positive path. Given that the PEOI is well below the midpoint of 2 and very much in to the relatively pessimistic territory there needs to be a significant rise in the PEOI to reflect a mood shift from pessimism to optimism,” it 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 Perceived Economic Opportunity Index was developed and is measured by the Foundation for Economic Freedom in Sri Lanka in partnership with Friedrich Naumann Stiftung Fur Die Freiheit. Fieldwork is carried out by market research agency PepperCube Consultants.