Perceived Economic Opportunity Index picks up in March

Tuesday, 22 April 2014 00:01 - - {{hitsCtrl.values.hits}}

The Perceived Economic Opportunity Index (PEOI) for March picked up slightly; from 1.68 to 1.71, its compiler the Foundation for Economic Freedom in Sri Lanka (FEFSL) said. “The good news however, is that the trend line indicates that after hitting its lowest level in the first quarter of last year the PEOI has slowly turned upwards, albeit marginally,” it added. FEFSL said perhaps the non-event of feared imposition of economic sanctions at the UNHRC and the expected victory of the ruling coalition at the provincial council election even with a reduced majority may have helped the index move up. However, the PEOI is still languishing in negative territory since its inception in the third quarter of 2011. We believe this movement of the index reflects the general below par economic activity in the country; particularly in the private sector where credit growth is at a historic low since 2009, but this time with much lower interest rates than then. The fact that the Government has once again fallen way short of meeting its foreign direct investments targets also, perhaps, is a function of these negative sentiments. It will be interesting to see how the PEOI moves with the various new challenges posed by a possible international investigation by the UNHRC as well as possible elections next year. The Perceived Economic Opportunity Index (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.