Disruptions from Elections and COVID-19 Pandemic affect Business Environment

The Business Climate Index (BCI) decreased by 16.9 basis points from 53.4 in the previous quarter (July-September 2020) to 36.5 in the current quarter (October-December 2020). The business environment’s negative sentiments were primarily driven by some persistent challenges in doing business and new emerging ones. In particular, the domestic political election cycle amidst continued disruptions brought about the COVID-19 pandemic elevated the perceived risks for doing business in the current quarter. In terms of business constraints, limited access to credit, increased competition, insufficient demand and tax policy continue to constrain business competitiveness. Their severity was perceived to have been elevated during the current quarter. Perceptions about business sentiments in the next quarter (January–March 2021) are pessimistic on account of the expected deterioration in business environment, business optimism, anticipated rise in input costs and inability to establish new businesses possibly signalling business environment slump in post-election period.