P&A Grant Thornton News

Business optimism slips in Philippines though 2nd strongest among 36 marts

BUSINESS OPTIMISM in the Philippines fell in 2016’s final three months, continuing a decline seen in the third quarter, but it was still among the strongest in a list of 36 economies, according to results of a global survey that were e-mailed to journalists yesterday.

Grant Thornton’s International Business Report (IBR) showed overall business optimism in the Philippines sliding four points to a net 80% in the last three months of 2016 from the third quarter’s 84%.

The report -- based on interviews with 2,500 chief executive officers, managing directors, chairmen or other senior executives across industries -- showed the Philippines was bested last quarter only by India and Indonesia which both registered 88%, though down from third-quarter readings of 93% and 98%, respectively.

China got 46%, a 16-point leap from 30% in the third quarter, Japan worsened to -45% from -37%, Malaysia fell 24 points to -36% from -12%, Singapore was flat at -28%, Thailand’s reading eased two points to 16% from 18%, while that of the United States improved to 58% from 43%.

The Philippines’ 80% last quarter also compared with 39% (10 points less than the third quarter’s 49%) among members of the Association of Southeast Asian Nations (ASEAN), Asia and the Pacific’s 30% (three points up from 27%), “emerging” Asia Pacific’s 53% (11 points up from the preceding quarter’s 42%) and a global 38% (five points up from July-September’s 33%).

The survey asked top executives on their expectations for improvement in revenues, exports, employment, profitability, research and development (R&D) investment, as well as prospects for economic uncertainty. The Philippines fared as follows:

  • Expectation of improved revenues slipped two points to 58% from the third quarter’s 60%, against ASEAN’s 44% (from 46%), Asia Pacific’s 47% (from 42%), “emerging” Asia Pacific’s 51% (from 41%) and a global 50% (from 45%)
  • Expectation of better exports improved six points to 30% from 24%, against ASEAN’s 14% (from 13%), Asia Pacific’s 12% (from 15%), “emerging” Asia Pacific’s 14% (from 13%) and a flat global 16%.
  • Expectation to hire new workers slid 10 points to 54% from 64%, against ASEAN’s 20% (from 22%), Asia Pacific’s 29% (from 28%), “emerging” Asia Pacific’s 28% (from 26%) and a global 29% (from 28%).
  • Prospects for better profitability showed the biggest improvement -- 14 points -- to 72% from 58%, in comparison to ASEAN’s 40% (from 38%), Asia Pacific’s 34% (from 29%), “emerging” Asia Pacific’s 39% (from 33%) and a global 41% (from 37%).
  • Plans to increase R&D investment dropped 10 points to 46% from 56%, against ASEAN’s 28% (from 22%), Asia Pacific’s 31% (from 32%), “emerging” Asia Pacific’s 31% (from 37%) and a flat global 24%.
  • Finally, expectation of economic uncertainty increased two points to 40% from 38%, against ASEAN’s 48% (from 52%), Asia Pacific’s 45% (from 50%), “emerging” Asia Pacific’s 43% (from 44%) and a global 38% (from 42%).

“There is a striking split... between business leaders in emerging and developed Asia-Pacific countries,” P&A Grant Thornton Chairperson and Chief Executive Officer Marivic C. Españo said in a statement.

“Part of the reason for this could be the likely scrapping of the Trans-Pacific Partnership, out of which developed economies -- like those of Australia and New Zealand -- stood to gain the most,” she added, noting that “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,” she noted.

“Globally, the increase in optimism reflects a view among the business community that uncertainty over the outcome of major events like the EU referendum [in the United Kingdom] and the US presidential election is now behind them.” - RSCC

 

As published in Business World, dated 3 January 2017