MAYDAY call for economy

May, 18, 2022

Corporates continue to view the economy in an extremely pessimistic light

"With the youth spearheading the nationwide demonstration and expressing their concerns, the voice of the people has started to rise and be heard," notes NielsenlQ's Director - Consumer Insights Therica Miyana - deniya.

She continues: " April has been a pivotal month; a turning point where the people have taken things into their own hands. The patience of the people has grown thin; and the realisation of what is happening has hit hard on the greater population. The daily struggle to survive and shortages of essential items - which have led to long queues - have taken their toll on the people."

And indeed, the April LMD- NielsenIQ  Business Confidence Index (BCI) survey puts things in perspective.

THE ECONOMY A massive majority (87%) of poll respondents now expect the national economy to worsen further, which is two percentage points higher than in the previous month. As far as comparisons go, the level of economic pessimism stood at 55 percent six months ago.

And as for survey participants who express optimism, a mere three percent (as in March) say the economy will 'improve' in the coming 12 months while 10 percent believe it will 'stay the same' during this time (from 12% in the preceding month). SALES VOLUMES For whatever is left of 'business prospects,' expectations continue to be muted - to this end, 62 percent (from roughly two-thirds of respondents a  month ago) expect their sales volumes to 'get better' in the 12 months ahead.

This compares unfavorably with what corporate executives said in December when 86 percent of businesspeople who spoke to the pollsters expected their sales volumes to improve.

As in the two preceding months  however, there's good news in the latest report on how businesses have performed since this time last year nearly six in 10 survey respondents (March - 65%) reveal that their sales volumes have increased compared to a year ago. In contrast, only 36 percent said so on January.

Given the backdrop of multiple crises affecting the nation and its people, the short term sees a notable downgrade (by as much as 27 percentage points - from 58% to only 31%) in the outlook for the next three months. This is the lowest to which perceptions about near-term prospects have been this year.

INVESTMENT CLIMATE There's more bad news on the investment front too, in that last month's eye-opening majority of 92 percent of businesspeople who deem it to be 'poor' or 'very poor' has blown out to 97 percent.

And whereas eight percent of the survey sample perceived the investment climate as being 'good' or 'fair' in March, the count a month later has plummeted to a mere three percent.

EMPLOYMENT PROSPECTS Thankfully, a healthy 87 percent of poll respondents (vs.  94% last month) say their businesses will maintain existing staff numbers while only eight percent expect to shed human resources in the coming six months.

However, the proportion of corporates that say they plan to increase staff numbers has reduced from 10 percent to a mere five percent in the last six months.



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