Business Outlook Survey 2014 - Issue 1
February 01, 2016
1. HIGHLIGHTS OF THE FOURTH FNCCI BUSINESS CONFIDENCE SURVEY
The FNCCI Business Confidence Index (FNCCI BCI) for the period of August 2014 to January 2015 reached 58.0 as compared to the 55.8 in the third survey, which covered the period of February to July 2014. This indicates that the business confidence has increased in the review period.
The confidence level of the private sector on Nepalese economy has been on the rise since the first survey was conducted in June 2012. This can be contributed to the improving political environment where the country has witnessed some positive movement like, successful completion of second Constituent Assembly election, visit of the Indian Prime Minister in 17 years, signing of Power Trade Agreement between Nepal and India, signing of Power Development Agreement with two leading promoters of hydropower, among others.
The sectoral break ups- that is, agriculture, industry and service, also shows that the confidence has risen in the review period. The businesses involved in the agriculture sector (59.1) have higher confidence level than those involved in services (58.2) and manufacturing (57.4) sector.
In the fourth survey, data was collected from a sample of 302 respondents from all over the country. The survey covered 24 districts from the five development regions of Nepal and the survey was conducted on November and December 2014.
Of these respondents, 55.3 percent are involved in the services sector, while about 36.4 percent and 8.3 percent are involved in manufacturing and agri-business sectors.
64.3% of the respondents think that production will rise in future, while 47.1% of the respondents felt that it has remained the same in the review period.
51.2% of the respondents think that employment will increase in future, while 61.9% felt that it has remained unchanged in the review period.
67.7% of the respondents thought that cost of production has gone up in the review period and 65.7% feels that it will further go up in coming months as well.
44.0% of the respondents said that their profitability has remained the same in the review period while only 51.4% expects it to increase in coming months.
50.0% responded that export has remained the same in the review period while 52.4% expect it to rise in future. Similarly, in import, 48.6% has felt that it has remained the same and 49.7% expect it to rise in coming months.
When respondents were asked to compare about the overall business environment in Nepal between third and fourth survey, 51.0% responded that it has remained the same as in the previous survey while 63.8% expected that it would become better.
48.2% of the respondents think that taking loan from the bank has become easier in the review period while 54.5% expect it to become easier in future.
A majority of respondents (64.2%) said that the rate of inflation has increased in the review period while 52.5% expect it to increase coming months.
When respondents were asked to compare the overall economic condition of the country between third and fourth survey, 56.4% said that it has remained the same as in the previous survey while 54.8% expected that it would improve.
A majority of respondents thinks that inadequate supply of electricity is the top most critical challenge for Nepalese economic growth. Similarly, they have also considered corruption and lack of good governance as other binding constraints for economic growth in Nepal.
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