Business in PH: The winners and losers in 2015
MANILA, Philippines – Year 2015 has been challenging yet exciting for the business sector. According to the Business Expectation Survey that the Bangko Sentral ng Pilipinas (BSP) conducts every quarter, "business outlook on the economy turned more upbeat for Q4 2015, with the overall confidence index (CI) rising to 51.3% from 41.4% for Q3 2015. This CI – the highest in two years – indicates that more businesses are optimistic about the country's economic prospects for the last quarter of the year."
The visit of Pope Francis in January and the yearlong Asia-Pacific Economic Cooperation (APEC) meetings helped boost the business sector in 2015.
The state and pastoral visit of Pope Francis helped the Department of Tourism in attracting more tourist arrivals, while the 47 different APEC-related meetings held in various locations throughout the country saw the government spending roughly P10 billion ($211.50 million) on expenses that directly benefited several industries such as hotel, food, entertainment, and other service-oriented businesses.
While some businesses gained from the APEC summit, some sectors however felt the negative impact of the summit in their financials. (READ: APEC led to losses for hotels, airlines)
For instance, the airline industry incurred forgone revenues due to cancelled flights during the summit. The business process outsourcing (BPO) and some manufacturing companies, on the other hand, saw their labor costs increasing by 30% due to holiday pay.
The real sector remains a growing market in 2015, with the services sector like the information technology (IT)-BPO and overseas Filipino workers (OFWs) driving the sustained momentum of the property industry.
The stock market has been severely battered in 2015. It has been a challenging year for stocks.
As of this writing, the Philippine Stock Exchange index (PSEi) is losing by 6.7% year to date. Several factors dampened investors’ appetite in 2015 like the weak prospect in the global economy, China being a major contributor of global growth has shown economic slowdown, US dollar gaining strength over emerging market currencies and the much anticipated interest rate hike in the US.
While the country’s gross domestic product (GDP) managed to post 6% growth in third quarter of 2015 and expected the growth trajectory to continue for the fourth quarter, the negative sentiment surrounding the global market will prove to be a challenge for the Santa Claus or year-end rally in the stock market.
2016: Looking ahead
With the Association of the Southeast Asian Nations (ASEAN) integration coming in full swing, businesses are seen to benefit from the realization of an ASEAN Economic Community (AEC) where the integration is expected to boost investments, create more jobs and income in the region.
The integration is aimed toward leveling the playing field among business sectors in the region and eliminating trade barriers.
While the integration means additional market base for businesses in the country, business owners should gear up as it is also expected to bring tougher competition among regional peers.
One sector that is seen to enjoy continued robust growth is the IT-BPO sector.
The IT-BPO sector is expected to remain as one of the growth drivers of our economy. Currently, this sector has generated $21 billion in income and projected to surpass OFW remittances by 2017.
Demand for the property market is also expected to continue growing in 2016 as more new wave cities outside Metro Manila are being developed to cater to the growing needs of businesses and individual home buyers.
There is also a sustained growing interest of BPO companies in our country as evident in the number of full-time equivalent (FTE) employees that now stands at around 1.1 million and expected to grow by 1.3 million in 2016.
The demand for office spaces by this service sector will help sustain the momentum for the real estate market.
However, one sector that concerns us in 2016 is the agricultural sector as the effects of El Niño are projected to exceed P3 billion ($63.45 million) in losses.
The 2016 edition of the Organization for Economic Cooperation and Development (OECD) Economic Outlook and International Monetary Fund (IMF) projected Philippine economy to grow by 6.5% and 6.3% respectively.
These favorable forecasts reflect the continuity of our country’s growth story.
Year 2016 is a period of transitioning and hope for many of us.
Change is coming and we are hopeful for a lot of things.
The Philippine economy is ready for take-off and the country needs a leader who can stir sustainable growth, continue reforms, implement inclusive growth initiatives, and inspire the nation to be united in moving forward.
The country is also hoping that other sectors such as manufacturing and agriculture will be given development priorities as well as infrastructure build-up and implementation of more public-private partnership projects.
Cheers to a prosperous 2016! – Rappler.com
$1 = P47.28