Business optimism falls to 2-year low

Business optimism in the Philippines dropped to its lowest quarterly rating in two years, even though it still scored higher than the average rating in Southeast Asia, data from a global survey showed.

This was according to the Grant Thornton International Business (IBR) report, which interviewed more than 2,500 top business officials from all industry sectors in February and March.

Among other questions, the survey asked officials for their business optimism in the country’s economic outlook for the next 12 months.

In this regard, the Philippines had a net score of 74 percent in the first quarter of the year, lower than its 98 percent score in the same first three months of 2017.

This was also lower than the net score it got in the fourth quarter of last year of 86 percent. This was the lowest the country has gotten since 2016, wherein it recorded a business optimism of 56 percent, data showed.

In its statement, Grant Thornton said the drop in business optimism could be attributed to a decline in employment expectations and investments in plant and machinery, decrease in investments in technology and demand, and the drop in terms of profitability expectations.

These were declines when compared to their performance either in the first quarter of last year or in the fourth quarter of 2017.

Although the IBR findings showed that the optimism in the Philippines dropped, the Philippine ranked the third highest in optimism among Asian countries, the statement said.

It also scored higher than the Asia-Pacific and the Southeast Asian average, which stood at 52 percent and 61 percent, respectively.

In terms of the bigger picture, Grant Thornton said that there was a split in the outlook in the region. It said that optimism dropped in established economies of China and Japan, while it was up in the Association of Southeast Asian Nations.

“The dip in optimism in China and Japan hardly represents confidence in freefall. However, how the region responds will be telling. Asean businesses are currently optimistic, but if they see the war of words on trade develop between China and the United States, that confidence could start to evaporate,” said company chair and CEO Marivic Españo.

“Aside from the trade talks, the global economy is firing more strongly than it has in many years. Economic predictions are positive for the short to medium term, but history tells us that growth tends to come in cycles. For businesses across Asia, now represents a window of opportunity to invest in their future,” she said.