Firms less optimistic in first quarter 2022

THE rise of Covid-19 cases at the start of the year caused businesses to become less confident about the Philippine economy in the first quarter, a Bangko Sentral ng Pilipinas (BSP) survey showed on Friday.

The first-quarter 2022 confidence index (CI) — defined as the proportion of firms that answered “yes” minus those who answered “no” — fell to 32.9 percent from 39.7 percent in the fourth quarter of 2021, according to the results of the central bank’s latest Business Expectations Survey (BES).

“The respondents’ less buoyant outlook was largely affected by the resurgence of cases from the new Omicron variant and the consequent reimposition of stricter quarantine restrictions in many areas at the beginning of the year,” the BSP pointed out.

Other factors contributing to the lower business confidence for this quarter included rising raw material and fuel prices; a decrease in sales/demand for certain goods and services such as motor vehicles, education services and construction; a weakening peso; and the negative impact of natural disasters, such as Typhoon “Odette” in December 2021.

In the meantime, business sentiment for the coming quarter improved, with the overall CI rising to 59.7 percent from 52.8 percent the previous three-month period.

The Bangko Sentral said respondents’ optimism for the coming quarter was primarily attributed to a decrease in the number of Covid-19 cases, the further easing of community quarantines; an improvement in economic conditions and prospects of a recovery from losses incurred during the stricter community quarantines; an increase in volume of sales and orders; and an increase in economic activity due to the upcoming elections.

Business sentiment was also more upbeat for the next 12 months, with the overall CI improving to 69.8 percent from 67.6 percent in the previous quarter’s poll.

“The respondents’ more upbeat outlook for the next 12 months was attributed to: the easing of quarantine restrictions; the further reopening and improving state of the economy; an uptick in the volume of demand and sales; and an increase in economy activity due to the upcoming elections,” the central bank noted.

The most recent BES polled 1,498 enterprises across the country from January 21 to March 4 of this year.