Thursday, 01 February 2024 04:15

MSEs confidence index reached 33.2

Written by Karla Gutiérrez

Micro and small businesses have faced an environment full of uncertainties throughout 2023, which seems to be inducing a more cautious behavior in micro and small businesses.

The MSE Confidence Index published by FUSAI's MSE Observatory, shows that MSEs' expectations have not varied substantially, lessening an optimistic trend that was registered in 2022, when the results of the improvement in public security began to be palpable.

According to the latest survey, which covers all segments, at the end of the third quarter of 2023, the confidence index stood at 33.2, only 1.2 points lower than in the previous quarter.

Comparing 2022 with 2023, a significant change in business confidence is observed. While, in 2022, the index experienced ups and downs and reached its highest peak at the end of the year, the first three quarters of 2023 have shown a sideways movement.

The confidence index was 33.2 at the beginning of 2023, rose slightly to 33.4 in the second quarter and then dropped to 32.2 in the third quarter. This indicates that, despite some optimism among business owners, there is caution limiting the potential for expansion, especially compared to the previous year, when the index had risen 5.3 points in the third quarter.

Factors influencing business confidence

The growing caution among businessmen is due to several events that have affected prices and demand for products. These events include international conflicts that have kept oil and some food prices high.

At the regional level, strikes and the saturation of certain trade routes have made some products more expensive. In addition, weather events and inflation, which according to BCR data reached 15% in september 2023 with respect to the same month in prepandemia (2019), have considerably reduced people's purchasing power, thus affecting the demand for products.

Although micro and small businesses continue to face challenges, there has been no significant deterioration in their situation. A significant number continue to struggle with financial and competitive problems, but this has not changed much in recent times. However, there has been a notable increase in product shortages, reflecting problems in supply chains (2 out of 10 entrepreneurs complain about this problem).

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Outlook and strategies for 2024

The survey results show that global, regional and national events have significantly impacted the MSE sector. This has translated into stagnant demand for their products and services, persistent financial challenges, and an increase in product shortages. These factors are fostering a cautious attitude in the sector, which could limit investment and growth in 2024.

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Translated by: A.M