Business confidence remains intact in July

Monday, 28 July 2014 00:00 - - {{hitsCtrl.values.hits}}

LMD reports in its August edition that “socio-economic factors came into play amid a virtual freeze in business sentiment.” The LMD-Nielsen Business Confidence Index (BCI) – the only measure of its kind in Sri Lanka – edged up by just a single basis point to 139 in July, it reveals, in a pre-publication release sent exclusively to the Daily FT. The pioneering business magazine quotes Nielsen’s Managing Director Shaheen Cader, who said: “The BCI has remained more or less at a similar level in the last three months. This is significantly higher than the 12-month low of a year ago, but lower than in January and March last year.”

“In recent months, optimism over the business environment has increased, compared to six months ago, mainly as a result of exchange rate stability,” he adds. LMD also reports that there’s now a lower level of optimism in regard to the economy, and that only 35% of respondents say that conditions ‘will improve’ in the next 12 months, compared to 42% in June. But the investment climate, in the eyes of businesspeople, remains mixed. “Just over a third of respondents say it is ‘good’ or better (as in the prior month), 43% state that conditions are ‘fair’ (June – 36%) and 23% opt for an entirely negative response,” the magazine notes. A spokesman for LMD adds that “businesspeople are worried about how ethnic and religious disharmony will affect them, and as one respondent told the pollsters, ‘we are looking at a return to an ethnic crisis, and increased religious conflicts.’ How can businesses grow in this situation?” he asked. The unique index has remained more or less flat since March. As LMD predicted last month, it has stabilised around the 140 mark. But it says that the BCI “may come under pressure, as the reporting season (i.e. corporate financials) kicks in, Budget 2015 draws closer and perhaps the prospect of elections looms over what is presently a murky horizon.” LMD’s publisher Media Services says that the August edition issue of the magazine will be released to bookstores and supermarkets on Friday 1 August – on its 20th anniversary.