The coronavirus pandemic dragged optimism among midmarket businesses in the Philippines in the second half of 2020, a Grant Thornton report found.
The accounting firm’s International Business Report (IBR) showed that of the 50 midsized businesses surveyed in the country, 49 percent have a “slightly or very optimistic economic outlook for the next 12 months,” 5 percentage points lower than the first-semester figure.
Forty-three percent expect revenues to increase in the next 12 months, down 2 percentage points from the January-to-June figure; 47 percent see profitability, down 3 percentage points semester-on-semester; and 51 percent anticipate employment to improve, up 6 percentage points. Still, these figures remain lower than their pre-Covid-19 levels.
Fifty-three percent consider economic uncertainty as the top constraint in their ability to grow their business; 56 percent, shortage of orders; and 50 percent, availability of skilled staff and labor costs.
The report also identified research and development, staff skills and technology as major areas of investment. It said the need to invest in enhancing existing product portfolios, digital business models and having people with the skills to operate in a virtual world continued to drive investment decisions.
Midmarket companies planning to increase investment in new buildings declined to 39 percent and those looking to increase investment in plant and machinery rose to 46 percent.
But 47 percent believe shortage of funds would continue to be a constraint this year, up 6 percentage points semester-on-semester.
Data for the report was gathered from responses from nearly 5,000 business leaders in 29 economies.
“The latest IBR data demonstrates to us that midmarket business leaders globally are being very realistic about the challenges that the first half of 2021 will bring, but they are facing this uncertainty with sensible pragmatism and resilience,” P&A Grant Thornton Chief Executive Officer and Chairman Marivic Españo said in a statement.
“While the outlook is showing real improvement with both economic optimism and expectations around revenue and profits on the rise, it is important to note the context of these increases. In many cases the improvements we are seeing are due to firms benchmarking the next 12 months against the very depressed economic environment of 2020 due to Covid-19,” she added.
Despite the rollout of coronavirus vaccines, it would take time before economies return to anything approaching normality, according to her.
“Many businesses have already made transformational changes to their operating models and investments in this area, and this shows no sign of abating as everyone looks to ensure they are able to compete in a post-Covid world,” Españo said.
As published in The Manila Times, dated 27 January 2021