IBR

Companies prepare for brisker growth

Filipino businessmen are less optimistic but they continue to prepare for brisker growth, employing more people and expecting higher earnings.

A survey done during the first quarter of the year by Grant Thornton’s International Business Report (IBR) showed the Philippines’ outlook tracks the global trend when business optimism fell to its lowest level in three years.

The report showed that while optimism in the Philippines fell from 84 percent to 56 percent, the country’s outlook still ranks the third highest in the world.

Expectations for revenues, exports and more investments for research and development have improved in the Philippines despite lower expectations in most regions.

Marivic Españo, chairperson and chief executive officer of P&A Grant Thornton, said moments like the present when “most talk themselves into a global downturn” are in fact moments that present longer-term opportunities.

“The most dynamic and successful firms don’t let the noise from external factors out of their control distract them from looking at their own operations, and they continue to invest in the pursuit of growth years down the line. Without investment now, businesses will find themselves behind the curve when conditions overhead improve,” she said. 

The IBR said in the Philippines, optimism in Asia-Pacific has fallen from 31 percent in the fourth quarter of 2015 to 21 percent in the first quarter of the year. China dropped 9 points, from 36 percent to 27 percent, and the same is true in Malaysia (-14 percent to -24 percent).

However, optimism has increased among businesses in Thailand (4 percent to 12 percent) and Indonesia (56 percent to 57 percent).

The research said what led to the majority of regions globally reporting a fall in their economic outlook is a “potent combination of fragile financial markets, volatility in oil prices, concerns over terrorist attacks and political uncertainty including the prospect of the United Kingdom leaving the European Union and the US presidential race.”

Españo said the outlook of businesses in Asia-Pacific has weakened in the last three months due to a range of external factors, “not least the volatility we saw in financial markets in the first quarter which will have knocked sentiment.”

But Españo said when businesses look internally at their own operations, the outlook is much brighter.

Case in point is the Philippines where despite the wider uncertainty, many surveyed firms are confident about their prospects for revenue and employment plans.

“Much of the sentiment across the region is linked to activity in China and while growth there is still expected to cool, there is a broad feeling that the pace and the extent of the Chinese economic slowdown has not been as bad as feared,” Españo said.

Aside from optimism, expectations around other business measures in Asia-Pacific actually provide some welcome relief against a gloomy global backdrop.

The proportion of firms expecting an increase in revenue over the next 12 months has gone up slightly to 37 percent – the only region to report an increase. The same is true of employment; while every other region has reported a fall in the first quarter, the proportion of businesses in Asia-Pacific planning to hire more people went up from 23 percent to 27 percent.

Globally, business optimism fell to net 26 percent in the first quarter, the lowest quarterly figure since the fourth quarter of 2012. The trend is evident across the globe, including the G7 (down 7 percentage points in the first quarter), EU (down 4
percentage points), North America (down 6 percentage points) and Asia-Pacific (down 10 percentage points).

Españo added: “G20 finance ministers meeting this week will be extra cautious when considering measures to jumpstart the economy, given the whirlwind conditions dragging down business and market sentiment.” 

The quarterly global business survey covered 2,500 businesses in 36 economies.

As published in Malaya dated 19 April 2016 by Irma Isip

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