Business confidence, while remaining positive, weakened in the first quarter of 2022 as the overall confidence index (CI) decreased to 32.9 percent from 39.7 percent in the previous quarter, data from the Business Expectations Survey conducted by Bangko Sentral ng Pilipinas showed.
The lower positive index resulted from the combined effects of a decrease in the percentage of optimists and an increase in the percentage of pessimists.
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.
Other factors that contributed to the weaker business confidence for Q1 2022 were as follows: increase in prices of raw materials and fuel; decrease in sales/demand for certain goods and services such as motor vehicles, education services, and construction; weakening peso; and adverse impact of natural calamities.
For the next quarter, the business sentiment turned more buoyant as the overall CI increased to 59.7 percent from 52.8 percent a quarter ago.
For the next 12 months, business sentiment was also more optimistic as the overall CI increased to 69.8 percent from previous quarter’s survey result of 67.6 percent.
This is the highest reported CI for the next 12 months since the BES started to collect outlook for the next 12 months in Q3 2019.
Outlook across all types of trading firms is less upbeat in Q1 2022 but turns more buoyant for the near term
Moreover, a less favorable outlook was observed across the different types of trading firms (i.e., exporter, importer, dual-activity, and domestic-oriented) as all types of trading firms registered lower CI in Q1 2022.
The outlook for Q2 2022 of importers, dual activity firms, and domestic-oriented firms was more buoyant, while that of exporters was less optimistic.
For the next 12 months, domestic-oriented firms continued to be more bullish for the second consecutive quarter, whereas importers and exporters turned bearish. Meanwhile, dual-activity firms’ optimism was relatively steady.
Similarly, the outlook across sectors turned less optimistic in Q1 2022 as the CIs dropped for firms in the industry, construction, services, and the wholesale and retail trade sectors.
For Q2 2022, business outlook was more bullish for all sectors except the construction sector, whose sentiment turned less optimistic. Likewise, the CIs across all sectors for the next 12 months, except for the industry sector, recorded all-time highs in the current quarter.
Consistent with the national trend, the outlook of firms on their own business operations, as measured by their views on the volume of business activity and total orders booked, was less optimistic in Q1 2022. Meanwhile, a more optimistic outlook on the volume of business activity was recorded for Q2 2022 but a less upbeat outlook was recorded for the next 12 months.
