MANILA, Philippines—Filipino business leaders are even more upbeat about the local economy at the start of 2013, ranking the Philippines the second highest in the world in terms of business optimism, the results of an international survey show.
The results of the Grant Thornton International Business Report (IBR) survey for the first quarter of 2013 showed that a “balance” of 90 percent of respondents among Filipino businesses were optimistic about the economy for the next 12 months, up by 18 percentage points from the last quarter of 2012.
This makes the Philippines the second most optimistic country in the survey, behind Peru, which has an optimism “balance” of 98 percent.
The “balance” refers to the proportion of companies reporting that they are very or slightly optimistic less those claiming they are slightly or very pessimistic.
The proportion of optimists in the Philippines is also much larger than the average balance of 29 percent for the Southeast Asian region and the 27 percent global average, according to the results of IBR survey that were released on Wednesday by audit, tax, advisory and outsourcing services firm Punongbayan & Araullo (P&A), the Philippine member firm of Grant Thornton International.
The same IBR survey, however, revealed an alarming gap in the Philippines between businesses’ hiring appetite and the depth of the local talent pool.
An increasing number of Filipino business leaders are citing a lack of availability of skilled workforce as a business constraint: 46 percent of local respondents consider it a roadblock to growth, a steep climb from 20 percent in the first quarter of 2012. And yet the same proportion of respondents – 46 percent – say they have plans to hire new people in the next 12 months.
“Considering this picture, business leaders may run into problems filling positions in their organization,” said Marivic Españo, chair and chief executive officer of P&A. “It’s an unfortunate situation, because we have a 7.1 percent unemployment rate and yet executives are complaining that they can’t find talent. Perhaps the private sector and the academic community can work together to address this gap before it gets bigger.”
This quarter, there was also a significant increase in the proportion of Filipino business leaders who cited transport infrastructure as a business constraint: from 20 percent in the last quarter of 2012 to 42 percent.
On a positive note, expectations for profitability and revenues among Philippine businesses are both up 10 percentage points: 74 percent and 76 percent, respectively.
As a whole, while global optimism pales in comparison to the Philippine business optimism, the global level was already at its highest since early 2011. It has also picked up from a balance of 4 percent last quarter.
“Leading up to 2013, there were several positive forecasts for the Philippines, with independent economists projecting stronger growth for the next couple of years. So there is good foundation for this surge in optimism among business leaders,” Españo said. “And I think businesses here are picking up on the improving mood in the more mature markets, such as the US and Japan.”
Optimism in both countries showed marked improvement this quarter compared to the last quarter of 2012: from -4 percent to 31 percent for the US; and from -70 percent to -2 percent for “perennial pessimist” Japan.
Another welcome indicator is that mature markets are showing signs of willingness to invest. In the European Union, 44 percent of business leaders now plan to increase investment in plant and machinery in the coming year, up from 26 percent three months ago. Businesses in the G7 (34 percent, up 7 percentage points), North America (33 percent, up 5) and the PIGS (Portugal, Italy, Greece and Spain) economies (42 percent, up 27) all report strong increases in investment expectations.