Bad business mood

by Rey Gamboa – The Philippine Star, 2 Sep 2021

The business mood has now become so dire, with the economy dragging its feet through another period of tight quarantines. The scant optimism felt during the second quarter of the year as the government announced the end of the recession with double-digit growth figures has all but evaporated, as many businesses have been forced to close their doors again.

Don’t blame Delta.

As the most recent report of Moody’s Analytics points out, it is the Philippines’ “less effective” measures in managing the spread of COVID-19 “that create much uncertainty on the timing of a rebound.” Particularly singled out as reasons were “vaccine shortages and ineffective social distancing measures.”

Other countries like Singapore, which earlier had banked on a zero-COVID policy through contact tracing and granular lockdowns, quickly pivoted to a vaccination campaign that almost overnight gave immunity protection to more than 50 percent of their population.

While one may argue that Singapore is a small country with a population of only six million, what matters is how its government utilizes all resources and knowledge to keep its population safe during the pandemic while allowing the economy to keep on grinding.

In other words, it’s the bottom line that matters. The Philippines has chosen to take the harshest of lockdown measures as its main tool, but having little else to support it, has still led to record-breaking infection breakouts. Mandating the use of masks and shields was obviously not enough.

Dwindling reserve funds

With lockdowns likely to extend, the gloom that pervades businesses these days is caused by dwindling reserve funds. Retailers that have managed to keep their heads above water for over a year now are crying out loudest as dampened sales figures eat away their saved earnings.

They are not alone, though. Other sectors are equally struggling to stay afloat, with so much uncertainty as to when this pandemic will end, and if vaccinations will really do the trick given the emergence of deadlier variants.

This is reflected by BusinessWorld’s latest quarterly banking report which showed asset growth of the country’s 42 commercial and universal banks significantly slowing down, and even more scary, that the level of bad loans is increasing.

Sick businesses are being pummeled once again, and this time, the shadow of death appears imminent. Many have tried to hang on to the promise of vaccinations, but the slow pace is taking too much of precious time.

Downsizing reality

The prospect of the Philippine economy quickly recovering from the pandemic has become slimmer. Fitch Solutions has revised downwards its growth forecast for the Philippines this year from 5.3 percent to 4.2 percent. Moody’s Analytics slashed its outlook from 4.9 percent to four percent.

While such numbers are still on a positive note, the optimism is not shared on the ground.

Navigating the second year of this pandemic will be more difficult for most businesses outside the core of essential services like food and transportation. Those that will survive will have to deal with decisions to downsize operations, and layoffs will be part of the equation.

The “ber” months should kick off early Christmas carols and a merry-making spirit. Sadly, the holiday fever now seems too remotely far, with another kind of fever making its rounds: cabin fever, for staying too long inside the house.

Meanwhile, as we wait for better news, let’s just keep ourselves entertained with Jose Mari Chan memes.