ECONOMIC OUTLOOK BRIGHTENS

An optimistic outlook prevails amid signs of a fragile investment climate

Confidence in the economy remains strong in corporate circles, bolstered by yet another hike in biz sentiment a la the LMD-PEPPERCUBE Business Confidence Index (BCI).

According to PepperCube Consultants however, concerns about long-term growth and strategy loom large despite the healthier perceptions in corporate circles.

THE ECONOMY In the first week of February, 64 percent of BCI survey participants expressed confidence about the economy ‘improving’ over the next 12 months, marking a six point increase from January.

Notably, only eight percent were optimistic about the economy in the lead up to the presidential election in September.

Meanwhile, slightly over a third (34%) of respondents expect the economy to ‘stay the same’ (a 3% decline) while only two percent anticipate it will ‘get worse’ – down from five percent in the month prior.

SALES VOLUMES There’s been a major shift in sentiment among salespeople in February with an overwhelming 90 percent of polled executives saying they expect an improvement in their sales volumes over the next 12 months. This reflects a sharp 20 percent rise from January’s outcome.

Only seven percent anticipate their sales numbers will ‘stay the same,’ which represents a 22 point drop from 29 percent in the preceding month.

Seventy percent of respondents report an ‘increase’ in volumes compared to the previous month, which represents a substantial 27 percent jump from January’s 43 percent.

Additionally, 19 percent of survey participants say their sales volumes ‘stayed the same,’ reflecting a notable decline of 32 points from the month prior (51%). And a mere 11 percent report lower sales volumes (up from 6% a month ago).

Looking ahead, expectations of higher sales volumes over the next three months have surged by 28 percentage points to 79 percent – up from around half (51%) in January.

Meanwhile, 16 percent of the sample population believe their sales volumes will ‘stay the same,’ which is a 28 point fall. And only five percent expect their numbers to ‘get worse’ over the next three months – unchanged from the month prior.

INVESTMENT CLIMATE In contrast, the investment climate has taken a hit, returning to levels last seen in October.

In January, 27 percent of respondents rated Sri Lanka’s investment prospects as ‘very good’ but this share has since plummeted to a mere six percent – a sharp 21 point decline. The percentage that views the outlook as ‘good’ has dipped by three points to 33 percent.

And 52 percent believe the investment outlook is ‘fair,’ reflecting a 23 point spike from January’s 29 percent. The proportion of respondents rating the outlook as ‘poor’ or ‘very poor’ has inched up to nine percent (compared to January’s 8%).

EMPLOYMENT PROSPECTS Forty-eight percent of businesses say they plan to ‘increase’ their staff numbers while nearly half (49%) intend to maintain their current workforce – a one percentage point drop from 50 percent in the month prior.

Only three percent indicate they may consider downsizing within the next six months.

– LMD