BUSINESSMEN in the Philippines turned out to be Southeast Asia’s most confident about the year ahead even as optimism has slipped, with two out of three respondents “very optimistic” about the economy in 2019 after growing revenues by more than five percent last year, according to the latest International Business Report (IBR) which international consultancy Grant Thornton released on Sunday.
The IBR showed a net 66% of Philippine respondents were optimistic about the outlook for the economy “over the next 12 months,” placing the country sixth among the 35 economies covered and topping the five other major Association of Southeast Asian Nations (ASEAN) markets in the survey (Indonesia, which came in eighth globally with 61%; Malaysia, 38%; Singapore, 18%; Thailand -1% and Vietnam, 38%).
Still, Philippine business optimism was less than the 74% and 82% logged in 2018’s first and second quarters, respectively, although it was better than Southeast Asia’s 42% that itself was down from 61% and 64% in the first and second quarters, respectively.
“The business outlook for the Philippines reflects the outlook for both ASEAN and the rest of Asia Pacific — optimism has slightly dropped, but the region remains more optimistic than other parts of the world,” P&A Grant Thornton said in a statement sent with summary of IBR results.
The second-half 2018 survey had 4,933 global respondents, of whom 562 were in Southeast Asia and, within that region, 73 were from the Philippines.
“It doesn’t look like a downturn is on the horizon,” the statement quoted Ma. Victoria “Marivic” C. Españo, chairperson and chief executive officer of P&A Grant Thornton, as saying.
“Sentiment has more likely decreased owing to slower trend growth [balanced out by] subdued inflation and low macro volatility — a so-called ‘normalizing’ of the global economy.”
The report said this year, Filipino business executives expect “to earn more, charge more and employ more.”
A net 65% of Philippine respondents expected their business revenue to increase (placing the country fifth globally in a tie with Ireland), against ASEAN’s 44% and a global 41%.
A net 65% of those surveyed in the Philippines expected to raise selling prices (making the Philippines number one), against ASEAN’s 38% and a global 27%.
A net 47% in the Philippines (third place globally) plan to increase exports, against ASEAN’s 35% and a global 21%.
A net 52% (also third globally) expect to hire more people, against ASEAN’s 31% and 29% globally.
“While the general outlook for the Philippine economy remains very optimistic, financial constraints are seen as the most significant external barrier to expanding internationally,” Grant Thornton said.
“Generally speaking, ASEAN and China have held up far better than the advanced economies of Europe; ASEAN countries are trading effectively amongst themselves, thanks to year of economic cooperation, collaboration and integration.”
Francesca Lagerberg, global leader at Grant Thornton International, said that while the global financial markets have become increasingly volatile, business leaders in the real economy remain optimistic because global gross domestic product is expected to continue growing.
“[T]hey know their business will grow with it; despite increasing downside risk, economic fundamentals remain strong and opportunities exist.”
At the same time, “[a]s the economic cycle cools, it’s clear that business globally won’t have it as good as they did in 2018,” Ms. Lagerberg said.
“What we are seeing is a return to normality with more balanced and sustainable growth for economies.” — V. V. Saulon
As published in BusinessWorld, dated 28 January 2019