P&A Grant Thornton News

Business optimism in PH plummets, in Asia Pacific mixed – survey shows

Despite improved profitability, business optimism in the Philippines plummeted while Asia Pacific registered a split heading into 2017, a recent quarterly survey by Grant Thornton showed.

Findings from Grant Thornton’s most recent quarterly global survey of 2,600 businesses in 37 economies, reveal the Philippines has been seeing a decline in optimism this 2016.

Research from the Grant Thornton International Business Report (IBR) noted that starting with only 56 percent in the first quarter, the country saw an unprecedented rise in the second quarter when it leaped to 94 percent. However, the Philippines experienced a sudden drop of 10 percentage points in the third quarter, which has been continuing to descend up to the fourth quarter with only 80 percent.

However, profitability in the Philippines has increased from 58 percent (Q3) to 72 percent (Q4). Employment expectations remain healthy at 29 percent, and research and development plans for 2017 (31 percent plan to increase investment) are higher than this time last year (23 percent) – but down from the 32 percent recorded in Q3.

In the Asia Pacific region, emerging and developed economies are travelling in different directions when it comes to their outlook for the New Year. Globally, the research finds that the majority of business leaders start 2017 in a positive frame of mind.

Research from the IBR showed that business optimism among developed Asia Pacific economies has fallen 8 percentage point (PP) in Q4 2016 to net – 16 percent.

Japan in particular has fallen 8 percentage point to – 45 percent. However, among emerging Asia Pacific economies, the picture is much brighter. Business optimism has increased by 11pp to 53 percent.

Globally, business optimism at the end of Q4 2016 stands at net 38 percent. This is an increase of 5pp from Q3 and the highest level since Q3 2015.

Marivic Españo, chairperson and CEO at P&A Grant Thornton, commented:

“There is a striking split in the direction of travel between business leaders in emerging and developed Asia Pacific countries. Part of the reason for this could be the likely scrapping of the Trans-Pacific Partnership (TPP), out of which developed economies – like those of Australia and New Zealand – stood to gain the most. However, China is looking to implement its own regional economic partnership, which could fill some of that gap. The high levels of optimism in emerging economies reflect what can happen when closer economic ties are in place, with the ASEAN Economic Community agreed in 2015.

 

As published in Manila Bulletin, dated 3 January 2017