Business confidence continues to trend down

The LMD-Nielsen Business Confidence Index (BCI) declined for the second consecutive month, recording a substantial drop of 21 basis points to 153 in February. Despite this however, LMD points out that the index registered 115 a year ago while its average for the last 12 months stands at 108. According to Nielsen’s Director – Consumer Insights Therica Miyanadeniya, “businesspeople and citizens are now settling down, and facing the realities of their everyday existence” in the context of “little or no new economic policies, and the fear of the coronavirus gripping the nation”. 

She continues: “There was a drop in imports… and the seventh tranche of the IMF’s Extended Fund Facility (EFF) helped the balance of payments to a certain extent, minimising the impact of a drop in earnings from tourism and remittances flowing into the country.”

LMD reports that political interference and taxes are cited among the most pressing concerns in business circles although inflation appears to be less of an issue. Meanwhile, the economy ranks as the chief concern among businesspeople.

A spokesperson for the leading business magazine notes that while there was a question of whether the optimism among corporates in the wake of the November Presidential Election would persist, “corporate executives appear less confident about the business climate, although some of this is the result of external factors”.

As for the future of the index, she says: “With a general election on the cards, business sentiment could swing in either direction with the fallout from COVID-19 also coming into play in the short term at least.”

Media Services, which publishes LMD, says the latest edition of the magazine was released to leading bookstores and supermarkets on 6 March (for the full BCI report, visit www.LMD.lk).