Philippine economy

Despite polls, business execs optimistic about 2016

Rappler.com
Despite polls, business execs optimistic about 2016
A Makati Business Club survey of top businessmen shows that the majority believe economic growth will be better than in 2015

MANILA, Philippines – As the impending elections loom large over the economy, leaders of the country’s largest firms are optimistic that 2016 growth will be better than last year’s.

Results of the Makati Business Club (MBC) 2016 First Semester Executive Outlook Survey, released by the MBC on Thursday, April 7, showed that 52% of the senior business executives polled expect the country’s economic growth this year to be higher than last year’s GDP growth of 5.8%.

At least 39% foresee that the 2015 GDP growth will be sustained, while 9% project lower GDP growth for 2016.

MBC members’ top priorities for the next administration are:

  1. Infrastructure (57.75% of the respondents included this issue in their list)
  2. Corruption (40.85% of the respondents included this issue in their list)
  3. Peace and Order (32.39% of the respondents included this issue in their list)

Other notable issues identified include the following, in no particular order: poverty, job generation, agriculture, and education, among others. The survey was conducted among MBC members from  February 2 to March 16 of this year.

On consumer prices, 51% expect the country’s inflation this year to be higher than last year’s average rate of 1.4%. On the other hand, 41% expect inflation to stay at the same rate, while 8% project it to be lower in 2016.

On interest rates, 51% of the respondents foresee a lower 91-day Treasury Bill Rate compared to last year’s rate of 1.77%, 9% expect it to stay the same, while 40% expect to see it moving lower in 2016.

Majority expect the peso to depreciate against the US dollar by an average of 3.75% in 2016. Last year’s year-end rate was P47.166 / US $.

Investments and trade

It is in the area of investments and trade where analysts and foreign investors have expressed concern that the change of regime could make itself felt.

MBC members remain optimistic on these fronts, however, with 54% anticipating approved investments to be higher than the P106.6 billion recorded by the Philippine Statistics Authority (PSA) from January to September of last year.

Another 26% of respondents expect approved investments to remain the same, while 20% expect a decrease during the same period.

On trade, MBC members foresee an increase in both imports and exports with 62% expecting higher imports compared to last year’s $62.6 billion (from January to September), while 30% foresee it staying on the same level and the remaining 8% expecting imports to be lower this year.

This optimism can be reflected in results from January 2016, which showed that imports grew to their highest level in 5 years.

As for exports, 38% of MBC members expect higher exports in 2016, while another 38% expect it to stay the same and 24% expect exports to be lower than last year.

The PSA recorded $54 billion in exports last year, from January to September, a dip of 2.4% from 2014.

That dip has continued into 2016 with January export results showing a dip of 3.9%.

Positive corporate outlook

The vast majority of MBC members also expect the economy to translate into positive corporate performance for 2016.

A full 82% expect their gross revenues to be higher in 2016, 15% expect no change, and 3% expect revenues to be lower this year.

Meanwhile, 74% of the respondents also project higher net incomes in 2016, while 19% foresee no change, and 7% expect lower net incomes.

As for investments, 59% of the respondents said they will make additional investments in the coming year, with an average of P4.9 billion. The highest investments of over P1 billion are under the Diversified / Conglomerate and Services sectors.

In terms of workforce, 49% of the respondents plan on expanding their workforce with the majority of these companies found in the services sector.

On the other hand, 47% of the respondent companies expect to hold their workforce size steady, while only 4% foresee the possibility of laying off workers. – Rappler.com

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