Confidence Index Up 2.4%, Finally

The business confidence index of the National Council for Economic and Applied Research has grown by 2.4 per cent between October and January, indicating some degree of economic recovery.

The figures released by the think tank today has attributed this recovery to improved expectations of overall economic conditions, a better financial position of the firms surveyed and a change in the investment climate, though there was no improvement in the capacity utilisation level.

But NCAER has warned that the recession cannot be said to be over unless there is a continued rise in the index for more than a quarter. The survey has noted the measures adopted by companies in the second half of the last decade to improve efficiency.

 

An NCAER release says the present upturn in business confidence is seen across several sectors, in two out of four regions and in all firm groups as well as with respect to nearly all dimensions of business outlook.

NCAER said a larger portion of the respondents exuded confidence that overall economic conditions and financial position of the firms would improve in the next six months. A greater number of respondents also said the investment climate has improved. Also, the proportion of respondents who are operating at close to or above capacity utilisation has dropped marginally.

It said the impact of better agricultural harvest, housing sector buoyancy, expanding housing finance facilities and government spending on construction projects can be expected to offset some of the gloom in demand conditions in the second half of this year.