Optimism in the Philippines dropped 12  percentage points to 74  percent in the first  quarter of 2018 from 88 in the fourth quarter last year, the lowest in nine quarters, the Grant Thornton’s International Business Report (IBR) said.

But the Philippines is still the third most optimistic among countries in Asia, where the regional average is 52 percent and in Southeast Asia, 61 percent.

The Philippines ranked 12th among the 35 countries in Asia-Pacific covered by the survey.

The IBR said the dip in the country’s economic outlook is a contrast to those of its Southeast Asian neighbors and can be attributed to the following factors: decrease in employment expectations and investments in plant and machinery; decrease in investment in technology and increase in reduced demand and; decrease in profitability expectations

Both employment expectations and investments in plant and machinery in the country went down by 14 percentage points  at 52 percent and 40 percent, respectively,  compared to the fourth quarter of  2017. 

Investments in technology have gone down by 12 percentage points at 59 percent  compared to the previous quarter and reduced demand has increased by 12 percentage points.

Profitability expectations in the Philippines dropped 10 percentage points to 76 percent.

Both regulations and  red tape and information and communications technology infrastructure  are less seen as hurdles to doing business in the country.

Lastly, energy costs and transport infrastructure (both down 8 percentage points) are also seen as less of a constraint to conducting business. As a result, more than half of the businesses surveyed foresee an increased investment in marketing efforts, as well as in sales force effectiveness.

On the upside, businesses expect an increase in their selling prices (up 10pp) as well


As published in Malaya Business Insight, dated 01 May 2018