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Business Confidence Index

April 2012


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The Business Confidence Index, measured and monitored monthly by Deloitte, fell back 9 points this month. Although down to 85.4 points out of a possible 250, the Index still remains higher than in April last year (76.2).

A principal concern among executives is the severe rainy season affecting the coastal region and its aftermath. According to the National Risk Management Secretariat (SNGR), more than 34,000 hectares of crops have been lost throughout the country. The immediate effect has been an increase in produce prices.

According to those surveyed, 37% are of the opinion that the inflation rate will be up for the month while a further 51% foresee no change. Data released by the INEC shows that consumer prices rose 0.9% in March, driven by the increased cost of food and clothing. The annual inflation rate currently stands at 6.12% while the accumulated figure for the first quarter is 2.26%, a notable rise when compared to 2010 (0.16%) and 2011 (0.34%).

With respect to foreign direct investment (FDI), 44% of interviewees do not believe that the current socioeconomic environment is conducive to attracting greater investment, 53% see no change from the previous month while 3% are of the opinion that it has improved.

Nevertheless, local investment has increased, with injections into the construction sector helping to rejuvenate the country’s economy. Questioned on their optimism, 72% of respondents have retained the same outlook from the previous month, although 9% are now more upbeat.

One company performance indicator is the increase – or decrease – in profit-sharing payments. Among the survey’s participants, 61% are paying out higher amounts than last year with the industrial (68%) and finance (67%) sectors reporting the best figures.

With respect to new hires, numbers have remained constant during 2011 and the first months of 2012. Indeed, during the last month 81% of companies have retained the same or a similar numbers of workers compared to the previous month.

Regarding sales, 54% of those interviewed reported an increase in their year-on-year sales compared with the same period last year. Best performers were the commercial sector (64%) and the industrial sector (58%). When comparing monthly figures, 30% reported an increase, thereby evidencing that a buoyant economy and consumption are keeping sales levels high.