Coronavirus outbreak darkens business confidence in Q1 — BSP survey

MANILA, Philippines — Business confidence turned sour in the first three months of the year as fears over the economic damage from the coronavirus disease 2019 (COVID-19) outbreak deepen just when companies were recovering from the Taal volcano eruption last January, a central bank survey showed on Wednesday.

Results of a nationwide poll of 1,533 companies from January 24 to March 13 showed the overall business confidence in the country plummeted to 22.3% in the first quarter from 40.4% in the preceding three months after firms with pessimistic sentiment outnumbered the optimists.

The pessimism was prevalent across all sectors especially among industry firms. On the flip side, construction companies were more buoyant due to expected increase in volume of new infrastructure projects and potential clients.

In a statement, the Bangko Sentral ng Pilipinas attributed the respondents’ less upbeat sentiment to the coronavirus and African swine fever outbreaks, as well as to the Taal volcano eruption.

The BSP added that concerns on government policies like the termination of a military pact with the US, non-renewal of mining rights and travel bans frayed businessmen’s nerve in the first quarter. A seasonal slack in demand after the holidays and a decrease in orders also fanned the pessimism.

Looking forward, the BSP said business outlook was more favorable for the second quarter, with the confidence index rising 42.3% from 40.3% previously on expectations of higher sales, usual uptick in demand during the summer season, implementation of new business strategies and higher government spending on infrastructure.

However, business confidence on the economy for the next 12 months fell to 55.8% from 59.6% as companies brace for the economic impact of the virus outbreak and Taal eruption and as concerns on some government policies, particularly the Rice Tariffication Law, persist.