ECONOMIC PERCEPTIONS WEAKEN

Uncertainty dampens optimism in business circles due to a multitude of concerns

Optimism among corporates appears to be subdued as businesses continue to be marred by an uncertain and challenging macroeconomic environment. The latest results from the LMD-PEPPERCUBE Business Confidence Index (BCI) survey reflect ongoing concerns about the economic outlook.

THE ECONOMY In August, 16 percent of survey participants expressed optimism about the economy ‘improving’ over the next 12 months, representing an 11 percentage point drop from the previous month.

Additionally, 43 percent of respondents believe the economy will ‘stay the same,’ marking a 10 percent increase from July. Forty-one percent expect the economy to ‘get worse,’ which is a slight rise of one percentage point from a month ago.

SALES VOLUMES Salespeople are increasingly worried about the outlook with optimism declining since June. The exclusive poll reveals that only 18 percent of executives expect their sales volumes to improve over the next 12 months, representing a 12 percentage point drop from July’s projections.

Over four in 10 (41%) of survey participants expect their sales numbers to ‘stay the same,’ reflecting a notable rise from 29 percent in July. Meanwhile, 41 percent anticipate their sales volumes to ‘get worse’ – this has remained consistent over the past four months.

Nineteen percent of respondents report an ‘increase’ in sales volumes over the past 12 months – a decrease of five percentage points from July’s 28 percent.

In addition, 41 percent say their sales numbers ‘stayed the same,’ which represents a 13 point increase from the previous month. And 40 percent (July – 48%) report low sales volumes.

Looking ahead, expectations for higher sales volumes over the next three months remain muted with less than a fifth (19%) expressing optimism about their numbers ‘getting better’ – a 13 percent drop from the preceding month.

Meanwhile, four in 10 (40%) anticipate their sales volumes will ‘stay the same,’ reflecting a 14 percent increase. However, a notable proportion (41%) of survey respondents expect their sales volumes to ‘get worse’ over the next three months, which represents a slight decrease of one point compared to July.

INVESTMENT CLIMATE In August, the improvement observed over the previous two months diminished with only five percent rating Sri Lanka’s investment prospects as ‘very good.’

However, the percentage of participants that view the outlook as ‘good’ increased substantially by 28 percentage points to 57 percent.

Meanwhile, 17 percent view the investment climate as ‘fair’ (down from 43% in July) while just over a fifth (21%) consider the outlook to be ‘poor’ or ‘very poor’ – unchanged from the prior month.

EMPLOYMENT PROSPECTS Fifteen percent of businesses say they plan to ‘increase’ their staff numbers, which is a 10 percentage point drop from the 25 percent recorded a month ago.

In contrast, a large majority (79%) intend to keep their staff levels unchanged – up from 70 percent in July.

Moreover, six percent of respondents say they might consider downsizing over the next six months.

– LMD