Business confidence fell before Budget

Following two months of healthy gains, the LMD-Nielsen Business Confidence Index (BCI) fell by a massive 25 basis points to register 90 in March, according to the latest edition of LMD, which notes that the survey was conducted before Budget 2019 was presented in Parliament.

The leading business magazine also points out that this marks the steepest decline since December 2016, leaving it below its 12 month average of 98 and 27 notches short of where it stood a year ago.Nielsen’s Managing Director Sharang Pant remarks that this decline reflected anxiety in the business community ahead of Budget 2019, adding that “unlike in previous years when sentiment usually improved before the Budget presentation, the BCI for March dropped”.

High taxes, inflation and political interference are cited as major concerns for businesses with one executive stating that “production costs, taxes, and goods and services prices are high – and people’s income levels aren’t increasing in line with this”.

A spokesperson for LMD observes that the latest BCI highlights the volatility in corporate sentiment in Sri Lanka, pointing out that “the prospect of Budget 2019 was a likely cause of apprehension among respondents who may now have time to digest the Government’s fiscal policy proposals”.

As for the future, she says: “We expect sentiment to nudge upwards in the months ahead, until politics takes hold with a presidential poll due before the year ends.”

Media Services says the latest edition of the magazine will be released to leading bookstores and supermarkets on 5 April (for the full BCI report, visit www.LMD.lk).