P&A Grant Thornton News

Business optimism in PH remains high

Despite an increase in the Philippines’ economic uncertainty, overall optimism among businessmen in the country still remained high, according to the latest study by Grant Thornton.

The International Business Report, the quarterly business survey of 2,500 businesses in 36 economies by Grant Thornton revealed that the Philippines’ economic uncertainty has increased to 28 percent in the fourth quarter of 2017 from 22 percent in the third quarter.

Despite this increase, profitability among businesses in the Philippines also increased from 70 percent last Q3 to 86 percent in Q4.

The study showed that Philippines’ overall optimism remained high at 86 percent, up 2 percentage points on the previous quarter while revenue expectations steady at 88 percent. Profitability was also at all-year high of 86 percent, up 16pp over the last quarter.

The results were backed by a simple majority of 52 percent of Filipino business leaders being very optimistic about the outlook of the Philippine economy over the next 12 months, in comparison to 43.8 percent of ASEAN business leaders.  Majority of 66 percent of Filipino business leaders also forecast an increase in employment.

Half of respondents plan to improve salesforce effectiveness while 48 percent intend to develop and/or launch a new product or service.

The Philippine overall optimism level was higher than the global average of 58 percent.

Marivic Españo, Chairperson and Chief Executive Officer of P&A Grant Thornton, commented: “The results of the survey show that businesses are very confident about the economy. For one, the recent passage of the first tranche of tax reforms is expected to support public spending and investments in infrastructure and social services which, in turn, will create more opportunities for businesses.”

Optimism among business leaders in Asia Pacific has leaped 17pp over the past year to a historic high of 58 percent. The high levels of confidence are driven particularly by surges in China and Japan, where optimism has risen by 21pp and 29pp, respectively, over the same period. Expectations over revenue (67%) and profitability (47%) have also reached record highs for the region.

Notably, for the first time in nearly three years, Japanese optimism has entered positive territory at 3 percent — a 17pp rise over just three months. Strong exports are contributing to a more confident outlook, up 11pp to 12 percent compared to a year ago, and underpin an expanding economy, which is enjoying its seventh consecutive quarter of growth.

A revival in exports is taking place across the Asia Pacific region, up 10pp to 22 percent compared to a year ago, driven by recovering demand for cars and manufacturing equipment, particularly in China, where optimism has reached 78%. Where businesses in other parts of the world are scaling back their investment, those in Asia Pacific are planning to spend more on research and development, up 10pp to 39% compared to a year ago, as well as plant and machinery, up 9pp to 33 percent. China is particularly focused on these elements of longer-term growth, with 58 percent of businesses expecting to invest in research and development compared to a global average of 25 percent.

Confidence has boomed in Asia Pacific, reaching its highest peak in the history of the IBR. While China has experienced growing levels of optimism over the past year or so, Japan’s break into positive territory is a real sign of change in the region. As global trade improves, firms in Japan and China are also thinking about the future and investing in their long-term growth.

“This positive business sentiment in the region is an opportunity that Philippines businesses must consider as they plan for their long-term expansion and growth plans outside the Philippines,” said Españo.

 

As published in Manila Bulletin, dated 08 January 2018