Perceived Economic Opportunity Index in Oct. shows optimism falling

Saturday, 24 November 2012 00:01 - - {{hitsCtrl.values.hits}}

The Perceived Economic Opportunity Index (PEOI) continued its slide that started at the beginning of this year registering 1.69 for October; down 0.05 from September.

Index compiler the Foundation for Economic Freedom in Sri Lanka said policy makers should take note that not only the PEOI has been languishing in the ‘relatively pessimistic’ territory since its inception in July 2011 but moving away steadily from the midpoint of 2.0.

Segmenting the index components shows that over the last 12 months economic conditions, by and large, have deteriorated. The components related to family economics are continuing to drag the index down with people genuinely feeling the increasing cost of living resulting in difficulty in saving for the future.

However, perceptions on corruption are at an alarming and historic high with more than four out of five persons saying corruption has gotten worse in the last six months.

The PEOI is calculated on a monthly basis using a random sample of 100 persons based on seven questions: one each on income, saving and cost of living; one each on law and order, media freedom and corruption; and one question on opportunities to advance in the respondents job, profession or entrepreneurial activity.

The answers can only have three possibilities; the current situation with regard to each issue is worse than it was six months ago, the same or better than six months ago. A score of three is that Sri Lankans are becoming relatively more optimistic about the emerging opportunities while one is they are becoming relatively more pessimistic. A score of two indicates no change. Therefore, the trend is a more important indicator of changing perceptions than the absolute number.

The Perceived Economic Opportunity Index was developed and is measured by the Foundation for Economic Freedom in Sri Lanka in partnership with Friedrich Naumann Stiftung Fur Die Freiheit. Fieldwork is carried out by market research agency PepperCube Consultants.