MANILA - Sentiments of business owners on the first quarter of the year and the rest of the year indicates "greater optimism" based on the latest Business Expectation Survey, the Bangko Sentral ng Pilipinas said Thursday.

The Confidence Index (CI) for Q1 of 2021 rose to 17.4 percent from 10.6 percent in the fourth quarter of 2020, while the CI for Q2 of 2021 went up to 42.8 percent from 37.4 percent, according to the Business Expectation Survey for Q1 with 1,512 firms as respondents nationwide.

"The overall Confidence Index for Q1 and Q2 both posted increases from previous quarter survey results," the BSP said in a statement.

Optimism for the 2 quarters was attributed to the following:

• Easing of quarantine restrictions and the reopening of businesses
• Observations that people are adapting to the new normal
• Increase in volume of sales and orders
• Rollout of vaccines against COVID-19
• Development of new business strategies
• Expected higher demand for electricity and construction activities during the summer

Business outlook for the Philippine economy for the next 12 months was also "more upbeat" with the confidence index rising to 60.5 percent from the Q4 survey result of 57.7 percent, the BSP said.

Trading firms also remained optimistic for Q1 and the near term while domestic-oriented firms have a "broadly steady" outlook, the central bank said.

The outlook of the exporter and domestic-oriented respondent firms was also "less upbeat" for the next 12 months, data showed.

Meanwhile, business sentiment generally improved across sectors starting from the first quarter and the near term with more upbeat optimism for Q1 and Q2 for the industry and retail trade sectors, the survey said.

The construction sector, meanwhile, was "less optimistic," results showed.

Outlook on the firms' own business operations was likewise favorable for Q1 while Q2 had a more upbeat outlook across sectors except for construction, the BSP said.

Outlook on the employment index "marginally" increased but was higher for the next 12 months, "suggesting that firms are looking forward to hiring more people in Q2 2021 and the next 12 months."

Capitalization and expansion plans also strengthened for Q2, the survey showed. However, companies expect financial conditions and access to credit to remain tight for Q1, data showed.

Meanwhile, businesses expect to see a stronger peso against the dollar and the peso borrowing rates to decline. Inflation is also expected to rise for Q1, data showed.

Economic managers earlier predicted a lower Q1 gross domestic product growth and a return to positive growth in Q2. But the forecast was made before the recent surge in COVID-19 cases.

Metro Manila, Cavite, Rizal, Bulacan and Laguna is under enhanced community quarantine until at least April 11 as the confirmed daily cases breached the 800,000 mark.

With the new restrictions, mobility, businesses, jobs and consumption are once again limited, which could have an impact on growth in the next few months.

The Philippine Statistics Authority on Thursday lowered the Philippine economic growth rate in 2020 to -9.6 percent from -9.5 percent.

• Philippines lowers 2020 economic growth rate to -9.6 percent

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