Perceived Economic Opportunity Index up again in May

The Perceived Economic Opportunity Index (PEOI) that turned the corner in April maintained its positive movement in May with a sense of optimism being created due, most likely to the lack of any major ‘bad news’ during the month.

The most significant contribution came from the perceived ability to ‘just about make ends meet’ in the absence of any major increases in prices felt during the month. In should be noted that it is the perception that is being measured and most always it is a relative notion.

The Perceived Economic Opportunity Index was developed and is measured by the Foundation for Economic Freedom in Sri Lanka (FEF) in partnership with Friedrich NaumannStiftung Fur Die Freiheit. Fieldwork is carried out by market research agency PepperCube Consultants.

FEF said interestingly the PEOI at 1.78 is at almost the exact level from six months ago which happened to be the sharpest upward movement resulting from the positive sentiments of the budget presented in the previous month.  Will the index cross the barrier of 2 and move to positive territory soon; or will it drop again? “While we will need to wait to see the actual outcome the general sentiment among the sample surveyed is that the situation for the most part will remain the same for the next six months,” FEF said.

The PEOI is calculated on a monthly basis via 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.

FEF said 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 far more important indicator of changing perceptions than the absolute number, FEF added.