Business confidence at virtual standstill in May

The latest edition of LMD reports that the LMD-Nielsen Business Confidence Index (BCI) nudged up by a mere two basis points (to 119) in May. 

In contrast, the barometer of biz confidence “stood at a much healthier 141 points” in May last year, the leading business magazine notes. Nielsen’s Managing Director Sharang Pant states in LMD that “while GSP+ has been a welcome development, business leaders feel the economy is still at a standstill.”

He adds that “the short-term outlook for business is still weak” which could be because of “falling disposable incomes due to inflation and taxes.” 

“Rising interest rates, a depreciating rupee and inflation are seen as hurdles to business prosperity although the long-term outlook for businesses looks positive…on the back of GSP+-driven exports and investments,” Pant explains.

Moreover, he asserts that “businesses expect the Government to provide a clearer picture to potential investors on the state of the economy, policy changes and so on. A solution also needs to be found for the numerous strikes that cripple economic activity every now and then.”

The exclusive monthly survey reveals that at least a fifth of the respondents expect the economy to improve in the next 12 months. However, the overriding expectation (of 43% of the sample population) is that economic conditions will deteriorate. 

Where business prospects are concerned, LMD notes that sentiment appears to be mixed with 40% believing their sales volumes will grow in the next 12 months and the same number expects the status quo to remain unchanged. Two-in-10 corporates feel that business prospects are bleak.

Looking ahead, a spokesperson for LMD stated: “Coupled with a somewhat bullish stock market and tapering inflation, the outlook for business confidence may seem brighter than it has been for some time.

“That said, the stumbling blocks that are in the way of Sri Lanka’s push for economic advancement are likely to overshadow the positives – which is why we believe that the outlook for the BCI in the short term at least is murky,” headds.

LMD’s publisher Media Services says the June edition of the magazine will be released to bookstores and supermarkets on Friday, 9 June (for the full BCI report, go to www.LMD.lk).