Philippine economic growth has been forecast to decline further in 2020. Industry guidelines for COVID-19 are put to a test and running a business in pandemic this year is expected to become more difficult than ever.
Asian Development Bank (ADB) published a report in September, projecting the economy to contract by 7.3%, almost double compared to ADB’s 3.8% contraction forecast in June. The decline stems from border closures and strict lockdowns in the prolonged and continuing COVID-19 outbreak, which resulted in a decrease in private consumption, public investment, and tourism.
Meanwhile, inflation will remain subdued as disruptions in supply are offset by weak demand.
Projections have been different—New York-based Fitch Ratings forecast an 8% contraction, a double of its previous 4% contraction forecast in June and New York-based Moody Investors Service projected a 7% contraction.
Others have also adjusted their forecasts. The World Bank estimated the Philippines will experience a 6.9% contraction, from a previous forecast of 1.9%. S&P Global Ratings expects a contraction of 9.5%—more than a triple of its previous 3% forecast, and the International Monetary Fund downgraded its forecast to 8.3% from 3.6%.
With the economy expected to shrink this year, how do you ensure that your business is protected from the impacts of the crisis?
Understanding the change in customer behavior
Staying relevant is key and following guidelines for COVID-19 in navigating the “new normal” should be a top priority. This includes understanding the changes in customer behavior in the market.
Studies have observed that the pandemic has accelerated the trend of buying from local businesses and online grocery shopping. An increasing focus on health is also expected from consumers, even after the pandemic.
This highlights the importance of creating a strategy to support a healthy lifestyle for consumers and making “healthy” products and services more accessible to them.
More customers are also observed to be more cost-conscious when shopping. And digitals channels are becoming more important as a source of information for consumers.
Identifying trends in the “new normal”
Some shopping habits that were formed during the pandemic are predicted to last and reshape the business environment in the future.
A rise in online sales—during lockdowns, when mobility is restricted—is a trend that is forecast to continue post-pandemic. Brick and mortar stores are expected to have reduced visits from customers. And businesses will be pressured to conform to deliver higher standards of service when it comes to the “online shopping experience” of the customer.
Cashless transactions are also set to be “in demand,” with customers preferring the convenience of digital payment methods and credit cards instead of cash.
Sanitation in businesses will also become the bare minimum. Soap or alcohol dispensers are expected to be in key locations of a business—such as its entrance, counters, and comfort rooms.
Investments in technology and robots are also expected to rise, giving way to a “contactless” environment.
Hijacking growth during recovery
Economic experts are optimistic for a rebound in 2021, as seen in the cases of the previous recessions. The ADB forecast a 6.8% rebound for developing Asia, according to its report.
Meanwhile, the Asia and Pacific region have been releasing stimulus packages amounting to US$3.6 trillion to avoid further decay in the economy. Spending will gradually increase and businesses that were able to adjust to the “new normal” will experience an increase in brand awareness and customer retention and will have an edge over the competition.
Running a business in a pandemic is difficult, but preparing for uncertainties and cushioning the impact of the crisis through best practices are recommended. Make sure to follow guidelines to keep your business and your customers safe all throughout.
