Business confidence for the fourth quarter “turned less optimistic” due partly to “direction of foreign policies and economic reforms”, a central bank survey said Friday.

The overall confidence index for the fourth quarter went down to 39.8 percent compared to 45.4 percent in the third quarter, showing “pessimists increased but remained less than that of optimists during the quarter,” the central bank survey said.

. “Despite the usual uptick in demand during the Christmas season, business outlook was less buoyant for the current quarter due to perceived concerns over direction of foreign policies and economic reforms in the country, weakening global demand and foreign exchange losses due to peso depreciation and lack of supply of raw materials,” the survey said.

For the first quarter of 2017, the central bank survey said the business confidence declined to 34.5 percent from 56.8 percent in the previous survey.

“Respondents attributed their less optimistic outlook for Q1 2017 to the usual slowdown in consumer demand after the holiday season. Other reasons cited by firms were the direction of foreign policies and economic reforms, stiffer competition with the entry of new players in the market and the wait-and-see attitude of investors for the following year following the results of the US national elections, which could affect the interest rate movements,” the survey said.

The survey was done during October 3 to November 17, with 1,470 firms polled nationwide, the central bank said.

Companies still expect better financial conditions but firms “are of the view that their financing requirements could be met through available credit,” the survey.

Increases in commodity prices are expected to “stay within the 3 to 4 percent BSP ( central bank) inflation range for 2016 and 2017 at 2 percent for Q4 2916 and 2.1 percent for Q1 2017. DMS