BSP: More layoffs loom in Q4

by Lawrence Agcaoili (The Philippine Star), 28 Sep 2020

MANILA, Philippines — More companies may lay off workers as they shelve expansion plans for the fourth quarter and over the next 12 months as the economy took a downturn due to the implementation of mobility restrictions to curb the spread of the coronavirus pandemic, according to the Bangko Sentral ng Pilipinas (BSP).

Redentor Paolo Alegre, director of the BSP’s Department of Economic Statistics, said the result of the Business Expectation Survey (BES) for the third quarter showed the employment outlook index for the next quarter plunged to negative territory at -5.5 percent from 16.9 percent in the first quarter.

Likewise, the employment outlook index for the next 12 months also turned negative at -2.1 percent from 30.8 percent.

“This suggests that more firms may lay off workers in the fourth quarter and the next 12 months,” Alegre said.

According to the Philippine Statistics Authority (PSA), the country’s unemployment rate fell to 10 percent in July from a record high of 17.7 percent in April as the economy slowly reopened by shifting the National Capital Region to general community quarantine in June.

Alegre said the percentage of businesses with expansion plans for the fourth quarter declined to 11 percent in the third quarter from 30.2 percent in the first quarter and to 20.4 percent from 37.2 percent for the next 12 months.

“The percentage of firms that expressed expansion plans for the next quarter declined across the industry sub-sectors. Meanwhile, for the next 12 months, fewer respondents across all industry sub-sectors, except for the agriculture, fishery, and forestry sub-sector, indicated expansion plans,” he said.

Due to the impact of the COVID-19 pandemic, the BES indicated that businesses turned less optimistic for the fourth quarter as the confidence index plummeted to 16.8 percent in the third quarter from 42.3 percent in the first quarter.

Alegre said the weak business sentiment persisted for the fourth quarter as the continuing negative effects of the health crisis affect the volume of orders, sales and income as well as economic activity in general.

“Insufficient demand and domestic competition continue to be the major risks to businesses,” he said.

Firms indicated in the survey that their access to credit in third quarter was constrained with the credit access index dipping to -15.5 percent in the third quarter from 5.2 percent in the first quarter.

This was the lowest credit access index level since the nationwide survey was launched in the fourth quarter of 2006.

“The negative index means that more respondents reported difficulties in accessing credit than those that said otherwise,” Alegre said.

Alegre said businesses are looking at a lower inflation of 2.3 percent in the third quarter, 2.4 percent in the fourth quarter, and 2.5 percent in the next 12 months.

Likewise, he added enterprises are expecting a stronger peso of 49.8 to $1 in the third quarter, 49.8 in the fourth quarter, and 50.1 in the next 12 months.