BUSINESS LEADERS in the Philippines are the world’s most optimistic about the economy’s overall outlook, according to a quarterly survey conducted by Grant Thornton International among 5,000 respondents in 35 economies in May-June this year.
The rosy view of Philippine companies is in contrast to the global outlook where optimism, revenue expectations and profitability forecasts are generally down.
The consultancy firm’s International Business Report (IBR) showed overall global optimism (total optimistic less total pessimistic) dropped to 32% in the first half of 2019, compared with data in the second half of 2018. Most of the main measures of growth were down at levels not seen since 2016, Grant Thornton said.
“It’s important to heed the signs of volatility and uncertainty in global financial markets, but it’s also worth highlighting that local business leaders choose not to be paralyzed or get sidetracked by the grim possibilities. It’s likely because with strong economic fundamentals still in place, their business is poised to grow and more opportunities will surface,” said Maria Victoria C. Españo, chairperson and chief executive officer of top auditing firm P&A Grant Thornton, in a statement.
However, the IBR showed less developed economies such as the Philippines have rosier prospects.
Philippine business leaders’ overall optimism level stood at 73%, the highest among the economies surveyed. This was followed by Vietnam (72%), Indonesia (66%), India (64%), Ireland (63%), Botswana (60%), Netherlands (55%), Nigeria (52%), United States (52%) and China (45%).
“Philippine businesses are more upbeat than anywhere else in the region, with 73% optimistic about the domestic economy,” the report said, adding that expectations for revenue and profit growth in the Association of Southeast Asian Nations (ASEAN) mid-market have also risen and became among the highest seen globally.
The survey covered 4,928 respondents globally, including 105 respondents in the Philippines. Survey respondents worldwide are chief executive officers, managing directors, chairmen or other senior executives from across industries.
Ms. Españo said the bigger capital spending, especially by the government, and the steady flow of remittances from overseas Filipino workers (OFWs) have also continued to boost overall economic growth and optimism.
Globally, optimism continues to fall and uncertainty lingers in the mid-market, the report said. For the next 12 months, the outlook has fallen to a three-year low, with a net optimism of 32%, down from a net 39% in the second half of 2018.
“Economic uncertainty remains elevated, with 46% of firms identifying this as a constraint to business growth,” it said.
Expectations around revenues, profitability, and employment have fallen to 2016 levels. Fewer companies expect to increase prices over the next 12 months, compared with previous periods. The report said the findings are consistent with wider risks of weak inflation as global growth eases.
Of the firms surveyed, a quarter identified trade tariffs as among the most significant external barriers to international expansion even as export optimism is maintained despite a slower trade growth.
“Investment intentions are down, with firms generally scaling back investment in new buildings, plant, and machinery likely in response to rising concerns over a shortage in orders as well as the increased uncertainty. Investment in research and development as well as technology, though, continues to shine. With demand softening, firms appear to channel investments into quality enhancements,” the report said.
Ms. Españo said there is more than enough room to manage uncertainty and seize opportunities, one of which is the use of technology to remain competitive and plan for long-term success.
“Future growth is also on the horizon, but only if businesses attract and retain skills relevant for that future,” she said. — V.V. Saulon