ALMOST three-quarters of chief executive officers (CEOs) are confident about their organizations’ revenue growth over the next year, reflecting an improvement in their outlook even as the pandemic drags on, according to results of the PwC Philippines-Management Association of the Philippines survey.
Results of the survey conducted in July and August 2021 showed that 74% of 178 CEOs are confident about revenue growth over the next 12 months, compared with 59% of respondents in 2020 and 63% in the second quarter this year.
CEO confidence is, however, still lower than pre-pandemic levels, or 88% in 2019 and 89% in 2018.
Majority of the survey respondents were in the financial services, professional services, manufacturing, and technology sectors, mostly representing large firms.
PwC Philippines Vice Chairman and Assurance Managing Partner Roderick Danao said the improvement in business confidence can be attributed to the expected strong rebound this year coming from the slump in 2020.
“There’s no other way but go up given the worst conditions that we had in 2020. So, we see supply chain normalizing. We see workforce now adapting to the ‘new normal.’ We see companies investing in more and more technology so that the business will continue,” Mr. Danao said during a briefing on Monday.
The Philippine economy exited recession in the second quarter, growing by 11.8% in the second quarter as lockdowns eased.
However, the government lowered its gross domestic product (GDP) forecast to 4-5% this year from 6-7%, to reflect the impact of the two-week stricter lockdown in August amid a surge in coronavirus cases.
According to the survey results, CEOs who expressed the most confidence represent the largest and smallest firms.
While 37% of micro-businesses are “very confident,” 31% of large businesses said the same. Meanwhile, 18% of small firms are very confident, along with 12% of medium-sized companies.
Most firms in the Philippines are micro-, small-, and medium-sized enterprises.
Companies are more confident about longer-term prospects, with 91% of CEOs saying that their companies will experience revenue growth over the next three years.
More than 70% of the respondents said that the Philippine economy would recover within the next three years.
A little over half said that the GDP is expected to grow more than 4% in 2022. This is lower than the government’s 7-9% growth goal for next year.
Most respondents said that the growth drivers are infrastructure development, domestic consumption, and government spending.
DISSATISFIED WITH VACCINE ROLLOUT
Despite the improved confidence, businesses are still being impacted by the effects of the pandemic as 70% of respondents said that average revenues fall by at least 10% each time lockdown restrictions are put in place.
“This is the point: predictability. Business now knows what happens and they have adapted on the digital transformation and they’re investing more money into digital transformation,” PwC Philippines Chairman and Senior Partner Alexander B. Cabrera said.
“They will know that they will lose some money, but they can also predict how much it’s going to go forward and how much is going to go back. And give business predictability and they are going to go forward.”
Around 76% of CEOs said that the slow vaccine rollout will delay economic recovery, and another 44% said that political uncertainty will do the same.
“With just 12.9% of the Philippine population fully vaccinated as of 03 September 2021, 66% of the CEOs are dissatisfied with the vaccine rollout in the country,” the report read.
The Philippines is aiming to vaccinate 70% of its 110 million population against COVID-19 this year. However, the vaccine rollout has been hampered by delays in the delivery of vaccine supplies.
At the same time, CEOs believe that reliance on lockdowns (43%) and the threat of new COVID-19 variants (34%) will impede recovery.
The government is planning to shift to smaller and localized lockdowns, as it hopes to revive economic activity even as COVID-19 cases continue to rise.
Companies have also been affected by COVID-19 related global disruptions, including supply and labor constraints.
In response to the pandemic, 74% of CEOs are planning to increase their digital investments, while another 74% said they plan to boost cybersecurity and data privacy investments. They plan to invest in data platforms, artificial intelligence, and contactless payment systems.
Around 39% said they would invest less than 10% of revenues into digital, while 29% plan to invest between 10% and 20% of revenues.
When it comes to organizational growth, 84% said they would increase investments in leadership and talent development. — Jenina P. Ibañez