Results for the third quarter of the year 2020: Business sentiments remain pessimistic

The Central Bank of Aruba (CBA) recently concluded its Business Perception Survey (BPS) for the third quarter of 2020. The BPS assesses the economic perceptions and sentiments of local businesses as well as the continued impact of the COVID-19 pandemic on economic conditions and business activities.

After a small improvement in the second quarter, the Business Perception Index (BPI), comprising the current and short-term economic conditions, declined by 0.7 index point to 93.3 during the third quarter of 2020. The overall BPI indicates a slight decrease in business sentiments compared to last quarter (See Chart 1)[1]. The change in sentiments resulted from a reduction in both current and short-term future economic conditions.

Chart 1: Business Perception Index

Source: Centrale Bank van Aruba

The current economic condition index noted a contraction of 0.2 index point to 92.3, down from 92.5 in the second quarter of 2020. The short-term future economic condition index fell by 1.5 index points, i.e., from 96.4 in the second quarter of 2020 to 94.9 in the third quarter of 2020 (See Table 1).The percentage of respondents expecting negative economic growth in the next 12 months decreased by 16.6 percentage points to 70.2 percent.

In terms of the impact of the COVID-19 pandemic, the expanded Business Perception Survey also assessed the expected impact on business sales, the need for applying for emergency business funds, and the expected economic impact.

Roughly 42 percent of business respondents (41.5 percent) pointed out that the COVID-19 pandemic continued to have a significant impact on their business sales; 8.0 percentage points less when compared to 49.5 percent in the second quarter. Approximately 65 percent of business respondents (64.9 percent) expect the impact of the COVID-19 pandemic on the Aruban economy to last more than 12 months. As for the need for applying for emergency business funds provided by the Government of Aruba, 33.0 percent of the respondents applied for this funding during the third quarter, compared to 41.8 percent that applied during the second quarter.

The complete report of the Business Perception Survey is available on the website of the CBA (https://www.cbaruba.org/).q

Table 1: Business Perception Survey (General results)

 

Source: Centrale Bank van Aruba

  1. The index can vary between 90 and 110. Between 90 and 100 indicates a situation of pessimism. An index of exactly 100 indicates that businesses are neither pessimistic nor optimistic but are neutral with regard to their thoughts about economic developments in Aruba. Between 100 and 110 indicates a situation of optimism in business sentiments. ā†‘