The Economy - Mixed Economic Sentiments

Businesses are still wrestling with uncertainty – a familiar challenge in recent times. The latest results from the LMD-PEPPERCUBE Business Confidence Index (BCI) survey reflect a mixed bag in the context of economic sentiment.

While there are some positive indicators, several negatives persist.

THE ECONOMY In April, only 28 percent of survey participants expressed optimism about the economy ‘improving’ in the next 12 months, marking a seven point decline from March (35%).

On the contrary, nearly three in 10 (29%) anticipate that the economy will ‘stay the same,’ reflecting a 12 percentage point improvement from the previous month (17%). Meanwhile, 43 percent say the economy will ‘get worse,’ down five points from March’s 48 percent.

SALES VOLUMES Optimism is on the rise regarding sales volumes ‘getting better’ over the next 12 months with 36 percent anticipating an uptick – this represents a four point increase compared to March.

More than a fifth (23%) of poll participants anticipate their numbers to ‘stay the same,’ which is a slight uptick from March (21%).

Moreover, the percentage of respondents expecting sales volumes to ‘get worse’ has declined for the third consecutive month – by six percentage points to 41 percent.

And 27 percent disclose an ‘increase’ in sales volumes over the previous 12 months, marking a slight fall from March (29%).

Twenty-five percent say their volumes ‘stayed the same,’ which is a six percen­tage point increase from the previous month. And 48 percent report a decrease in volumes – that’s four percent lower than in the month prior.

Anticipation of higher volumes in the next three months has dampened with only a quarter (25%) of those polled expressing optimism about their numbers ‘getting better’ (i.e. 7% lower than in March).

Moreover, around a third (32%) expect their numbers to ‘stay the same,’ marking a notable 14 percent spike.

Overall, the prevailing sentiment remains subdued as less than half (43%) of PepperCube’s sample population believe their sales volumes will ‘get worse’ over the next three months compared to 50 percent in March.

INVESTMENT CLIMATE Optimism remains downbeat, as indicated by the stagnant five percent of respondents rating it as ‘very good’ – as in March.

Furthermore, there’s a persistent decline in the proportion of participants that view Sri Lanka’s investment prospects as ‘good,’ with the percentage dropping by one point to nine in April.

Forty-one percent perceive the climate as ‘fair’ while a majority (45%) still consider the outlook to be ‘poor’ or ‘very poor’ – a marginal decrease of two percentage points compared to March.

EMPLOYMENT PROSPECTS The April survey reveals a fall in the number of businesses hoping to ‘increase’ their staff numbers with only 17 percent intending to expand their workforce – this is a substantial decrease from the 31 percent recorded in March.

Meanwhile, an overwhelming majority (79%) say they plan to maintain current staff levels while four percent anticipate downsizing over the next six months, marking a reduction from the previous month’s 17 percent.

– LMD