Int’l Business Report: Profitability, exports expectations in PHL improved

Businesses have better expectations in the Philippines in terms of profitability and exports in the next 12 months, but overall optimism in the economy has declined.

According to the P and A Grant Thornton International Business Report (IBR) in fourth quarter of 2016 released on Tuesday, the Philippines IBR showed that business outlook for the next 12 months become less optimistic in Q4 2016 at 80 percent, which declined from 84 percent in Q3 and 94 percent in Q2, but higher than Q1's 56 percent.

Economic uncertainty in the country also increased to 40 percent in the last quarter's report from 38 percent and 24 percent in Q3 and Q2, respectively. Economic uncertainty was at its peak this year in Q1 at 46 percent.

Expectations on employment and research and development for the next 12 months both dropped by 10 percentage points quarter-on-quarter basis.

Employment outlook fell to 54 percent in Q4 from 64 percent in its previous quarter while prospects for R and D weakened to 46 percent from 56 percent.

Businessmen's expectations on their revenues likewise declined to 58 percent in the last quarter of 2016 from 84 percent in Q3, but profitability outlook recovered from 58 percent in Q3 report to 72 percent in Q4.

Outlook on exports further improved in the last quarter of 2016 to 30 percent.

At the start of 2016, prospect on exports was only at 18 percent. It went up to 20 percent in Q2 and increased to 24 percent in Q3.

Meanwhile, the IBR showed that business optimism globally increased by five percentage points to net 38 percent.

"Globally, the increase in optimism reflects a view among the business community that uncertainty over the outcome of major events like the EU referendum and the US presidential election is now behind them," said P and A Grant Thornton Chairperson and CEO MarivicEspaAo.

"Knowing the results will allow businesses to have a clearer steer on key issues such as taxes, jobs and trade policy," she added.

But in Asia Pacific economies, a split in optimism for the next 12 months was recorded as developed economies registered a decline of eight percentage points in Q4 2016 at net -16 percent while emerging economies has increased optimism by 11 percentage points to 53 percent.

"There is a striking split in the direction of travel between business leaders in emerging and developed Asia Pacific countries. Part of the reason for this could be the likely scrapping of the Trans-Pacific Partnership (TPP), out of which developed economies - like those of Australia and New Zealand - stood to gain the most," EspaAo noted.

"However, China is looking to implement its own regional economic partnership, which could fill some of that gap. The high levels of optimism in emerging economies reflect what can happen when closer economic ties are in place, with the ASEAN Economic Community agreed in 2015," the executive explained.

The IBR is a quarterly global survey of 2,600 businesses across 37 economies.

Source: Philippines News Agency

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