Businesses more optimistic in H1, says BSP

MANILA, Philippines — Businesses turned more upbeat for the first half amid hopes of further reopening the economy as well as the rollout of COVID-19 vaccines in the country, the Bangko Sentral ng Pilipinas (BSP) said yesterday.

Redentor Paolo Alegre, senior director of the BSP’s Department of Economic Statistics, said in an online press conference the latest Business Expectation Survey (BES) showed the overall confidence index improved for the second straight quarter to 17.4 percent in the first quarter from 10.6 percent in the fourth quarter last year.

The overall confidence index of the business sector slumped to -5.3 percent in the third quarter last year, the lowest since the first quarter of 2009 when the business confidence index slumped to -23.9 percent due to containment measures to prevent further spread of COVID-19.

“Consistent with the national trend, the outlook of firms on their own business operations was more favorable for the first quarter of 2021. Moreover, the sentiment of firms on the volume of business activity and total orders booked generally improved across sectors,” Alegre said.

Likewise, Alegre said the confidence index for the second quarter also improved further to 42.8 percent based on the latest BES from the previous quarter’s 37.4 percent.

Alegre attributed the improvement of business optimism in the first half to the easing of quarantine restrictions and reopening of businesses, the rollout of COVID-19 vaccines, the development of new business strategies, more people adapting to the new normal as well as higher demand for electricity and more construction activities during summer.

“For first quarter and second quarter 2021, the business sentiments of the industry and wholesale and retail trade sectors were more upbeat, while that of the construction sector was less optimistic. The outlook of the services sector was more buoyant for the first quarter of 2021, but was broadly steady for the second quarter of 2021,” Alegre said.

For the next 12 months, Alegre said the business outlook on the economy was more upbeat as the confidence index increased to an all-time high of 60.5 percent from 57.7 percent in the previous quarter.

Alegre said the outlook for the next 12 months is the highest index recorded since the start of the 12-month outlook in the third quarter of 2019.

However, Alegre said the latest BES conducted from Feb. 4 to March 12 this year covering 1,512 companies did not factor in the reimposition of the enhanced community quarantine in the National Capital Region and nearby provinces that started in March 29 due to the rising number of COVID-19 infections.

“Respondents are adapting or developing strategies to the new normal. So again, it pays with the expectation that this lockdown will not be as extreme as before,” Alegre said.

The economy contracted by 9.6 percent as the economy stalled when the government imposed the longest and strictest lockdown in the world. The entire Luzon was placed under enhanced community quarantine in the middle of March last year but the economy was partially reopened when NCR shifted to general community quarantine last June.

For her part, BSP senior assistant governor Iluminada Sicat noted the positive developments in both global and domestic economies as well as the rollout of COVID-19 vaccines around the world.

“In addition to that, there are already economies opening up and this will provide opportunities also for some of overseas Filipino workers who have been displaced in the early part of 2020,” Sicat said.

Sicat said the direction of the government right now is not to have a hard lockdown as it aims to contain the COVID-19 infections on a targeted approach.