Biz confidence gains reversed ahead of budget

Business magazine LMD reports that “recent gains in business sentiment are reversed ahead of the national budget” and that “post-election disenchantment and the potential implications of Budget 2016” have resulted in a U-turn in business sentiment. 

“The future direction of the index hanging in the balance,” it adds.

This sentiment comes in the wake of the LMD-Nielsen Business Confidence Index (BCI) plummeting by 46 basis points in October, from an all-time high of 204 during the previous month.

Such a fluctuation occurred once before this year, when the unique index skyrocketed by 52 points, in the immediate aftermath of the presidential election in January, only to fall by 34 points in the following month once the post-election euphoria faded.

The magazine quotes Nielsen’s Managing Director Shaheen Cader, who attributes the fall to “declines in ratings for all measures pertaining to the economy and business volumes, both in the short and medium term.” 

Cader adds that the business community has chosen to wait and watch for “evidence of changes in government policy”.

According to LMD, “a majority (56%) of the people polled expect the economy to improve in the forthcoming 12 months, while 23 percent think there would be no change and 18 percent feel economic conditions would deteriorate over the next year.” 

Meanwhile, the investment climate is being viewed by the majority (45%) of respondents in a positive light, while 40% peg conditions as being ‘fair’ and 15% consider Sri Lanka’s FDI prospects as ‘poor’ or worse.

LMD says that the “corporate community will likely continue to remain cautious in the run-up to the Government’s fiscal policy statement later this month”.

Media Services, LMD’s publisher, says the magazine will be released to bookstores and supermarkets on Monday, 9 November (for the full BCI report visit www.LMD.lk).