Company heads across industries think the economy will continue its decline until the end of the year as majority of these executives are not confident that their businesses will grow in the next 12 months, a survey from PwC Philippines showed.
Seventy-four percent of chief executive officers (CEOs) said that the country’s economy would contract this year as it continues to bear the burden of a global pandemic and the increasing COVID-19 infections, according to the PwC MAP 2020 CEO Survey.
Considered as PwC’s biggest pool of respondents so far, 161 CEOs answered the online survey from July to August, at a time when quarantine restrictions were eased in an effort to find the delicate balance between preserving life and restarting the economy.
Among other questions, the survey asked CEOs what they thought would be the real gross domestic product (GDP) growth rate for this year and the next. Thirty-six percent of the survey respondents expected the full-year GDP to plunge steeper than 4-percent while 83 percent expected the economy to recover in one to three years. But only a handful of CEOs think that economic recovery also meant robust growth.
In fact, only 15 percent expect the Philippine economy to grow more than 5 percent next year, while the rest see some small increase or at least flat growth for 2021.
It was not clear if this was reflective of the overall sentiment in the private sector. Micro and small businesses—which make up more than 90 percent of the formal economy—accounted for only 6 and 10 percent of survey respondents, respectively.
On the other hand, 34 percent of the respondents were medium-sized enterprises, while the remaining 50 percent was accounted for by large companies.
When asked how representative the survey was to the situation faced by local companies in general, PwC Philippines’ chair and senior partner Alexander Cabrera said that the survey results actually showed that many businesses were “badly hit.”
The survey asked CEOs about their confidence for their companies’ revenue growth over the next 12 months. Only 17 percent said they were “very confident,” while 42 percent said they were just “somewhat confident.” Lastly, 28 percent and 12 percent said they were “not very confident” and “not confident at all,” respectively.
Cabrera interpreted these figures this way: When a CEO said he or she was very confident, it means the business will certainly grow within a year. When the reply is “somewhat confident,” the expectation is zero to a bit of growth, but is not really sure about it.
“[When] you add the uncertainties there, they are already making a bold statement that they’re going flat with a little bit of growth, but the rest of the [42] percent [are] saying we are not certain. We may not grow. We are definitely badly hit,” he said.
“If [over] 40 percent [are] saying that, I don’t think that that is by any means a misrepresentation of what’s going on in the business community and in the marketplace,” he said.
Various industries were represented in the survey, with professional and business services, financial services, technology and manufacturing of industrial products accounting for more than 10 percent each. INQ