MANILA – Businessmen who participated in the survey conducted by the Bangko Sentral ng Pilipinas (BSP) until the first half of March indicated a favorable outlook for the second quarter of the year, better than the outlook for the first quarter.
In a report on the results of the Business Expectation Survey (BES) for the first quarter of 2020, the BSP said the confidence index for the second quarter improved to 42.3 percent, higher than the 40.3 percent during the survey done in the last quarter of 2019.
The respondents attributed their optimism to the prospects of higher orders or sales in the community, finance, business, and trade sub-sectors, the usual rise of demand during the summer, enrollment, and harvest seasons, implementation of new or enhanced business strategies, expansion of businesses, and higher government infrastructure spending.
Expansion plans for the second quarter also posted a better index at 30.2 percent from 29.2 percent in the previous survey but the index for the next 12 months slid to 37.2 percent from 38.1 percent.
On the other hand, confidence index for the first quarter slipped to 22.3 percent from 40.2 percent in the previous quarter’s survey.
The respondents attributed their outlook to concerns on the negative impact of the coronavirus disease 2019 (Covid-19) global pandemic, the African swine fever, the Taal Volcano eruption; anxieties on the results of the government policies on the Visiting Forces Agreement with the US, the non-renewal of mining rights, and travel ban; lower orders and volume of business activity and production; seasonal drop in demand after the holiday season; low supply of raw materials and products.
This outlook is similar to those of business owners from Brazil, Canada, Croatia, Germany, Hungary, Israel, and the US, the BSP said.
The BSP, however, noted that while overall business sentiment for the first quarter was dampened by several factors, investors from the construction sector remained upbeat.
“The outlook of construction firms for the current quarter was more buoyant due to expected increase in volume of projects (under the “Build, Build, Build” program) and new prospective clients,’ it said.
For the next 12 months, the outlook is also less optimistic with the index at declining to 55.8 percent from the previous quarter survey’s 59.6 percent.
Respondents pointed their outlook to unfavorable effects of the Taal Volcano eruption and virus outbreak, as well as worries on government policies like those for rice tariffication, imposition of price ceilings on certain medicines, and possible imposition of safeguard duties on imported vehicles.
Among select economic indicators, the respondents expect the peso to strengthen against the US dollar, the interest rates to drop but inflation rate seen to increase both for the first and second quarters.
For the next 12 months, the respondents still expect the peso to strengthen and the interest rates and inflation to rise.
The survey was conducted from January 24 to March 13, 2020 before the enhanced community quarantine (ECQ) was declared over mainland Luzon to address the rise of coronavirus disease (Covid-19) cases.
The ECQ for Luzon was initially scheduled to be implemented from March 16 until April 12, 2020 but was extended until end-April to allow experts more time to assess whether the quarantine was able to flatten the curve of Covid-19 cases. (PNA)
