Biz confidence at a 16-month low

Wednesday, 9 March 2016 00:00 - - {{hitsCtrl.values.hits}}

February’s LMD-Nielsen Business Confidence Index (BCI) continued to head south, recording a 16-month low, with the unique the barometer standing at 138, the latest edition of leading business magazine LMD reports.

“Economic and investment-related woes struck a further blow to business confidence, with corporates looking to policymakers to make good on promises and accelerate development,” it explains.

LMD notes that a majority (54%) of the sample population expect economic conditions to deteriorate in the medium term, while 36% remain pessimistic – as was the case in the prior month.

Nielsen’s Managing Director Shaheen Cader points out that “concerns about the economy have continued to increase, along with future business prospects, causing a drop in the index. In this regard, some respondents have mentioned that plans for development and economic growth have yet to be actioned.”

He also notes that “nervousness about ethnic issues (a reference to the ‘Sinhale’ campaign) has also emerged, and could have impacted business confidence.”

The exclusive monthly survey reveals that the value of the Sri Lankan Rupee has become a critical issue for businesspersons, with one respondent lamenting that the currency’s depreciation “has caused us to incur high input costs.” But despite the southbound trend of the index, 52% of those spoken to expect sales volumes to improve, while 16% say that it is likely to worsen in the coming 12 months. Where short-term business prospects are concerned, 39% state that volumes “will get better,” 38% say the status quo would be maintained, while 23% take a negative view.

Meanwhile, LMD states the index is unlikely to gather any momentum because of “the dearth of positive policy initiatives on the economic front, the prospect of more [local government] election fever, infighting in Government ranks, and talk of a new party sitting across the aisle in the House may ruffle more than a few feathers in the circles of power.”

Its publisher Media Services says that the March edition of LMD will be released to bookstores and supermarkets on Friday, 11 March (for the full BCI report, go to www.LMD.lk).