Global business sentiment improving but firms still cautious

MANILA, Philippines — Businesses all over the globe have become more optimistic as COVID-19 vaccines are rapidly deployed, but many remain cautious with the virus proving to be unpredictable.

Based on the second quarter Global Risk Survey of UK-based Oxford Economics, 70 percent of businesses have become more positive about prospects for the global economy.

“Business sentiment has improved. Upside hopes now rest as much on consumers’ willingness to run down savings accumulated during the pandemic, as on the successful rollout of mass vaccination programs,” Oxford said.

The survey was completed by 157 businesses from April 14 to 29 across sectors, including financial institutions, industrial manufacturing and materials, real estate, real estate finance and infrastructure, and energy and natural resources, among others.

Almost 20 percent of the respondents were from the Asia Pacific region.

The survey was conducted amid mixed developments. COVID-19 cases are rising sharply again in many economies, including the Philippines, but other countries are already posting significant economic recoveries.

Against this backdrop, almost half of the respondents said they view risks as slightly to the downside (45 percent, up from 40 percent in March) or heavily to the downside (four percent, up from one percent).

Around a third of businesses see risks as balanced.

Overall, businesses generally see a relatively moderate rebound in the global economy.

However, the world’s largest firms continue to see near-term downside risks to global growth amid new COVID-19 variants.

About 71 percent of respondents cite as the top risk either the persistence of restrictions throughout 2021 or the return of nationwide lockdowns globally in response to the new variants.

Oxford said inflation concerns have also risen as one in every seven respondents cite the potential for higher inflation to trigger market turmoil as the top near-term downside risk.

Despite ongoing mass vaccination programs, almost one-third of businesses noted that repeated pandemic waves are a very significant risk to the global economy over the next five years.