ECONOMIC SENTIMENT PERKS UP

Economic optimism reaches a six month high amid heightened business activity

There’s been a ground swell surrounding the economic outlook among businesspeople with the gauge of sentiment marking a six month high in March. PepperCube Consultants says this reflects robust sales volume projections and increased activity.

“A significant portion of companies are maintaining a growth oriented approach [to business]… and the overall picture reinforces the perceived resilience of the economy,” it explains.

THE ECONOMY In the first week of March, 73 percent of LMD-PEPPERCUBE Business Confidence Index (BCI) survey participants expressed confidence about the economy ‘improving’ over the next 12 months, registering a healthy nine point spike from February.

Only 19 percent expect the economy to ‘stay the same,’ marking a notable 15 percent decline; and only eight percent anticipate it will ‘get worse’ – up from two percent in the month prior.

SALES VOLUMES There has been a shift in sentiment among salespeople with 84 percent of polled executives saying they expect an improvement in their volumes over the next 12 months. This represents a six point decline from February, when it rose by a massive 20 percent from the month prior.

Twelve percent anticipate their sales numbers will ‘stay the same,’ reflecting a five point increase from seven percent in the preceding month.

Meanwhile, more than three quarters (76%) of respondents report an ‘increase’ in volumes compared to the previous month, which represents a six percent jump from February’s 70 percent.

Additionally, 15 percent say their sales volumes ‘stayed the same,’ marking a decline of four percentage points from the previous month (19%). And a mere nine percent report lower sales volumes, which is a slight dip from 11 percent a month ago.

Looking ahead, expectations of higher sales volumes over the next three months have dropped by six percentage points to 73 percent – down from 79 percent in February.

And 22 percent of the sample population believe their sales volumes will ‘stay the same,’ marking a six point spike. Only five percent expect their numbers to ‘get worse’ over the next three months – unchanged for two consecutive months.

INVESTMENT CLIMATE In contrast, the investment climate continues to deteriorate, returning to levels last seen in October when the country was battling a debilitating economic crisis.

In January, 27 percent of respondents rated Sri Lanka’s investment prospects as ‘very good’ but this has since plummeted to a mere five percent in March.

The percentage viewing the outlook as ‘good’ also declined by three points to three in 10 (30%). And 52 percent believe the investment outlook is ‘fair’ as in the month prior whereas the proportion of respondents rating the outlook as ‘poor’ or ‘very poor’ has risen to 13 percent compared to February’s nine percent.

EMPLOYMENT PROSPECTS Forty-six percent of businesses say they plan to ‘increase’ their staff numbers while nearly half (48%) intend to maintain the status quo – a slight decline of a percentage point from the month prior.

Only six percent say they may consider downsizing in the next six months.

– LMD