Global uncertainty may be rising but Philippine companies have maintained their optimistic outlook on the domestic economy, according to a recent business survey by accounting and consulting firm Grant Thornton International.
In the Asia-Pacific region, emerging markets including the Philippines were holding up well, Grant Thornton’s International Business Report revealed.
The report is based on a quarterly global survey of nearly 5,000 mid-market companies in over 30 countries interviewed in May and June this year.
Data on the first half of 2019 showed optimism, revenue expectations and profitability forecasts were down in economies around the globe compared with second-half 2018 data, “with most of the main measures of growth at levels not seen since 2016,” the report said.
Yet, there were pockets of resilience across midsized companies, such as in export expectations, which were expected to fare well globally amid the threat of a US-China trade war.
The outlook continued to vary between emerging and developed economies in the Asia-Pacific, reflecting varying levels of their exposure to the trade war. Optimism was generally down in the region, falling 8 percentage points since the second half of 2019 and more than 50 percent lower than the first half of 2018.
Less developed economies such as the Philippines, however, had rosier prospects. Philippine businesses were more upbeat than anywhere else in the region, with 84 percent of those polled being optimistic about the domestic economy.
Expectations for revenue and profit growth in the Asean mid-market, too, rose and were now among the highest globally.
“It’s important to heed the signs of volatility and uncertainty in global financial markets, but it’s also worth highlighting that local business leaders choose not to be paralyzed or get sidetracked by the grim possibilities,” P&A Grant Thornton chair and CEO Maria Victoria Espano said. “It’s likely because with strong economic fundamentals still in place, their business is poised to grow and more opportunities will surface.”
She also cited bigger capital spending, especially by the government, and the steady flow of remittances from overseas Filipino workers that continued to boost overall economic growth and optimism.
In September, a slowdown in the global economy and domestic investment prompted the Asian Development Bank to provide a slightly lower economic growth forecast for the Philippines.
In an update of its flagship annual economic publication, the ADB changed its forecast for the country’s gross domestic product growth to 6 percent in 2019 and 6.2 percent in 2020, against an earlier forecast of 6.4 percent for both years. The International Monetary Fund has a slightly lower projection of 5.7 percent GDP in 2019, 6.2 percent in 2020, and 6.5 percent by 2024. The World Bank’s updated projection for 2019 is at 5.8-percent GDP growth.
Investor sentiment in the country was generally positive paired with a pickup in business confidence, as reflected in the Bangko Sentral ng Pilipinas’ third-quarter consumer expectations survey.