Business sentiment up in first half, BSP survey says

The sentiment of business owners in the Philippines improved for the first half of the year, according to results of a survey conducted by the Bangko Sentral ng Pilipinas (BSP) conducted before the reimposition of the enhanced community quarantine (ECQ).

According to the Business Expectations Survey (BES) of the central bank, the overall confidence index (CII) rose to 17.4% in the first quarter from 10.6% in the fourth quarter of 2020.

For the second quarter, the business outlook was recorded at 42.8%, an improvement from the 37.4% recorded during the previous quarter.

At a virtual briefing on Thursday, the BSP attributed the optimism for the two quarters was attributed primarily to the easing of quarantine restrictions, and the reopening of businesses.

The government in October decided to ease restrictions to a general community quarantine (GCQ). This increased the allowed capacity in public transport and establishments, as well as the age restrictions that were in place.

Other drivers for the optimism are the observations that the public is adapting to the "new normal," the increase in the volume of sales and orders, the vaccine rollout, and the development of new business and marketing strategies.

The business outlook on the country's economy for the next 12 months was also more upbeat, as the CI increased to 60.5% from the fourth-quarter survey result of 57.7%, still on the same drivers.

The survey, however, was conducted from February 4 to March 12 or before the government announced the reimposition of stronger restrictions in Metro Manila and four provinces.

The country reimposed the ECQ, the strictest possible restrictions, in the NCR Plus Bubble from March 29. This was initially scheduled to last in Metro Manila, Cavite, Laguna, Rizal, and Bulacan until April 4, but was extended for at least another week to April 11.

Asked if the reimposition of stricter quarantines could dent business sentiment moving forward, the BSP said it is still too early to tell as there are a lot of factors that will be considered such as the vaccination rollout.

"There are a lot of positive developments happening around us and I think the lockdown is not the only factor that could affect the sentiment of businesses as well as the consumers," BSP Assistant Governor Iluminada Sicat told reporters.

"There are good developments not only global as well as domestic activity, there was an upgrade in terms of the view of the different international organizations on global growth and we see that you know, this will affect also the economic activity here in the Philippines," she explained.

The survey took into consideration responses from 1,512 firms across the country. Samples were drawn from the Top 7,000 Corporations ranked based on total assets -- 585 companies in NCR, and 927 firms outside the metropolis.

The response rate for the quarter was lower at 63.8% from 64.8% in the fourth quarter of 2020. The response rate for NCR was lower at 61% from 65.3%, but higher for areas outside NCR at 65.6% from 64.5%. — RSJ, GMA News