SURVEY of ECONOMIC EXPECTATIONS BUSINESS OUTLOOK BACKGROUND PAPER OBJECTIVE The Survey of Economic Expectations and the Business Outlook are designed to provide a snapshot of business opinions regarding the expected future state of their business, their industry, their economic sector and the Barbados economy overall. These surveys are intended to provide coincident information on the economy which should be timelier than official statistics. Though the Barbados Chamber of Commerce & Industry (BCCI) in collaboration with ABELIAN Consulting Services (abelian) conducts the surveys, the Survey of Economic Expectations and Business Outlook are aimed at all business sectors and at all business sizes, since together this better represents the Barbados economy (which is made up of many small and medium-sized firms) than large companies alone. By surveying the entire spectrum of businesses types and sizes, not only can abelian better serve its clients, but the BCCI through its committees can garner a variety of information about business views at different points of the business cycle and improve its overall advocacy efforts at a national level.
DESCRIPTION AND USES The Survey of Economic Expectations and the Business Outlook are sample surveys. That is; only a proportion of the economic is used to represent the economic as a whole. Many official statistics are calculated in a similar manner; therefore – from theoretical viewpoint – the survey process is not unusual. The Survey of Economic Expectations will be an annual exercise which will seek to capture national business sentiment and the issues related to such, whereas the Business Outlook will be conducted on a quarterly basis and will focus more directly on the activities of firms. Surveys are distributed electronically to business executives with the assistance of other membership based organisations. Each firm/business executive self-selects its business sector, region of residence, and firm size.
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SURVEY of ECONOMIC EXPECTATIONS BUSINESS OUTLOOK BACKGROUND PAPER The Survey of Economic Expectations asks a variety of questions. For example: • • • • •
a firm’s belief that the economic is in a sustained recovery. a firm’s prediction for how much longer a full economic recovery will take overall business climate compared to neighbouring countries a firm’s opinion regarding the expected level of new capital investment a firm’s actions related to hiring, outsourcing, capital spending, advertising and promotion etc.
The Business Outlook asks a variety of questions. For example: • a firm’s confidence in future business conditions in 12 months’ time; • a firm’s view of where activity in their own firm is heading a year hence; • a firm’s opinion surrounding the expected future movement in unemployment and employment, interest rates, ease of obtaining credit, investment in property, plant and equipment, and profits in a year’s time; • a firm’s expectation of their product’s price(s) in 3 months’ time; and • the expected level of annual inflation in 12 months’ time. For the sectors that apply, the survey asks: • in which direction a firm anticipates their export volumes will move and the expected change in livestock investment in 12 months’ time; • in which direction a firm expects their utilisation of capacity to move in 12 months’ time; and • for an indication of the expected change in residential and non-residential building activity in 12 months’ time.
QUANTITATIVE CONVERSION Although both surveys are themselves qualitative in nature, the reported statistic for each question is a single net balance number where applicable. That is, for each question the respondent is asked to indicate “improved” or “increased”’, “deteriorated” or “decreased”, or “remain the same”. Respondents are expected to extrapolate from their own experience driving by internal performance data
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SURVEY of ECONOMIC EXPECTATIONS BUSINESS OUTLOOK BACKGROUND PAPER when answering the questions in the surveys whilst also taking into consideration any relevant issues currently affecting their industry and/or sector. The responses are then converted into a net balance statistic via the calculation: đ?‘›đ?‘›đ?‘›đ?‘›đ?‘›đ?‘› đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘?đ?‘? (%) = ďż˝ Where
(đ?‘–đ?‘– − đ?‘‘đ?‘‘) ďż˝ ∗ 100 (đ?‘–đ?‘– + đ?‘‘đ?‘‘ + đ?‘&#x;đ?‘&#x;đ?‘&#x;đ?‘&#x;đ?‘&#x;đ?‘&#x;)
đ?‘–đ?‘– is the number of “improvedâ€? responses;
đ?‘‘đ?‘‘ is the number of “deterioratedâ€? responses; and
đ?‘&#x;đ?‘&#x;đ?‘&#x;đ?‘&#x;đ?‘&#x;đ?‘&#x; is the number of “remain the sameâ€? responses; Figure 1: Confidence Range
Very low -100 -60
Low
Balanced -20
Moderate +20 +60
High +100
Figure 1 shows the range of the net balance statistic which has a minimum of -100 (0 improved and remained the same responses) and a maximum of +100 (0 deteriorated and remained the same responses). Research shows a strong positive correlation between business confidence and economic growth. Countries with consistent metrics on the greener end of the confidence spectrum tend to have stronger economic performance which is underpinned by the robust business activity.
Business Participation, Survey Distribution & Dissemination Our aim is to have as wide a cross section of executives in the business community respond to the surveys so as to better track and discern levels of confidence across industries. This would significantly enhance the level of business intelligence in the country and allow for more incisive advocacy not only for these industries/sectors but for the business community in general. Both surveys are designed to be deployed and/or distributed electronically via email thus also the respondent of completing and also submitting their responses abelian SEEBO Background Paper / 3 of 4
SURVEY of ECONOMIC EXPECTATIONS BUSINESS OUTLOOK BACKGROUND PAPER electronically. The advantage of this approach is that is very cost efficient and eliminates any administrative data input error. The response times for the Business Outlook survey will generally be a 2-week window for completion during the first month of each quarter to allow for sufficient time to collate and analyse the results in order to disseminate on the first Wednesday of the following month.
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