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Philippines: Businesses turn more optimistic amid full economic reopening
MANILA, Philippines — Businesses turned more buoyant for the second quarter and the next 12 months with the full reopening of the economy, according to the Bangko Sentral ng Pilipinas (BSP).
Redentor Paolo Alegre Jr., officer-in-charge of the BSP’s monetary policy subsector, in a virtual press conference, said that results of the First Quarter 2023 Business Expectations Survey (BES) showed that business sentiment turned more optimistic for the second quarter with the overall confidence index rising to 49 percent from the previous quarter’s 31.3 percent.
This was the highest since the 59.7 percent recorded in the first quarter of last year.
With the full reopening of the economy due to the easing of pandemic restrictions, Alegre said the more optimistic outlook of the respondents from the second quarter could be attributed to expectations of higher volume of sales, particularly food and beverages, electronic parts, computers and laptops, paint, garments, airline tickets, and loan products.
He added that the survey respondents also cited the improved business activities and operations, as well as the seasonal uptick in demand during the summer months.
For the next 12 months, Alegre also reported that business sentiment was more buoyant with the overall confidence index significantly increasing to 61.9 percent from previous quarter’s 46.2 percent.
This was also the highest since the 69.8 percent booked in the first quarter of 2022.
“The respondents’ more buoyant business confidence for the next 12 months was also attributed to their optimism about higher demand or sales, a fully reopened economy, better business conditions, and new business opportunities,” he added.
According to Alegre, the business confidence index rose sharply to 34 percent for the first quarter of the year from the previous quarter’s survey results of 23.9 percent.
“This means that the percentage of optimists increased and outweighed the percentage of pessimists during the quarter,” he said.
He explained that the more upbeat outlook of respondents from January to March this year was attributed to expectations of higher consumer demand, full reopening of the economy, and return to pre-pandemic normalcy as more COVID-19 restrictions are lifted, increased business activities, and sustained economic recovery, as well as expansion and new business opportunities in healthcare, manufacturing, and construction sub-sectors.
He added that the Philippines mirrored the business sentiments in China, the Euro area, Hong Kong, Australia, Thailand and Vietnam.
The survey was conducted between Jan. 13 and March 6, covering 1,554 companies nationwide.
The Philippine managed to sustain its growth momentum with a faster gross domestic product (GDP) growth of 7.6 percent last year, slightly above the government target of six to seven percent from 5.7 percent in 2021, as strict COVID-19 quarantine and lockdown protocols were lifted.
This was achieved despite the series of aggressive rate hikes delivered by the BSP Monetary Board to tame inflation and stabilize the peso. The key policy rates were raised by 425 basis points, bringing the benchmark rate to a 16-year high of 6.25 percent from an all-time low of two percent.
The country slipped into a pandemic-induced recession in 2020 with a GDP contraction of 9.6 percent, as the economy stalled after the government implemented one of the strictest and longest lockdown in the world to slow the spread of COVID-19 infections.
Alegre said that the major business risks identified by the respondents were stiff domestic competition, insufficient demand (33 percent), and high interest rate.
He pointed out that concerns over COVID-19 among respondent firms continued to subside as the number of firms indicating COVID-related restrictions as a business constraint significantly declined.
He added that businesses expect that the peso may appreciate against the US dollar and the peso borrowing and inflation rates may rise for the second quarter and the next 12 months.
Source: https://www.philstar.com/business/2023/03/31/2255722/businesses-turn-more-optimistic-amid-full-economic-reopening