Business optimism in the Philippines have dropped by 12 percentage points in the first quarter this year to 74 percent from 86 percent in the fourth quarter in 2017, but the country ranked third highest in optimism among Asian countries, according to global research from Grant Thornton’s International Business Report (IBR).

Other countries that reported the same dip in their economic outlook were mainland China, Japan and Indonesia. This is a contrast to those of its Southeast Asian neighbors and can be attributed to some factors, the survey said.

Foremost, the survey showed a decrease in employment expectations and investments in plant & ma-chinery. Both employment expectations and investments in plant and machinery in the country went down by 14pp compared to Q4 2017.

Employment expectations are down by 10pp in the Asia Pacific and have remained flat in Southeast Asia. Other Asian nations that have re-ported a large drop in employment expectations are Japan (22pp decrease), Malaysia (12pp decrease), and China (11pp decrease). For investments in plant & machinery, China has seen a significant dip by 16pp.

The survey also revealed a decrease in investment in technology and increase in reduced demand.

In the Philippines, investments in technology have gone down by 12pp com-pared to Q4 2017 and re-duced demand has in-creased by 12 pp.

In Singapore, investments in technology have also dipped (down 10pp). Japan (up 10pp) has also seen demand further reduced.

Profitability expectations in the Philippines dropped 10pp compared to Q4 2017. In the Asia Pacific and within Southeast Asia, profitability expectations dropped 7pp.

Although the IBR findings reveal that the optimism in the Philippines has dropped, the Philippine ranked the third highest in optimism among Asian countries, where the regional average is 52 percent and the South-east Asian average is 61 per-cent. Both regulations & red tape (down 12pp) and infor-mation & communications technology infrastructure (also down 12pp) are less seen as hurdles to doing business in the country.

Business expect an increase in their selling prices (up 10pp) as well. Lastly, energy costs and transport infra-structure (both down 8pp) are also seen as less of a constraint to conducting business. As a result, more than half of the businesses surveyed foresee an in-creased investment in mar-keting efforts, as well as in salesforce effectiveness.

Overall, business optimism across Asia Pacific is down from its recent peak in the first part of 2018.

However, the findings also revealed a split in outlook. Optimism was down in the established economies of China and Japan, while it posted positive in the emerging ASEAN region.

At a global level, business optimism stands at an all-time high during the first quarter of this year.


As published in Manila Bulletin, dated 01 May 2018