Big business still bullish — survey

SENIOR EXECUTIVES of some of the country’s biggest companies have a rosy outlook for the general economy and business prospects this year, according to results of the First Semester Executive Outlook Survey which the Makati Business Club e-mailed to journalists yesterday.

“The Makati Business Club ( MBC) members expressed a highly optimistic outlook for the Philippine economy, expecting it to either surpass or sustain last year’s 6.8% GDP growth,” the MBC said in a statement on survey findings.

“This is despite anticipating an increase in inflation and interest rates this year, coupled with a critical outlook on trade.”

The survey — conducted Feb. 2 to March 15 — got responses from 76, or a fifth, of the MBC’s 380 corporate members, with majority from senior executives and top management representatives.

“The drivers include confidence in the economic managers team of the administration, the 10- point economic agenda and its alignment with private sector’s agenda and the commitment of government to prioritize infrastructure spending over its six-year term,” MBC Executive Director Peter Angelo V. Perfecto said in a mobile phone reply to questions.

“This risks include the other cabinet members who may have a totally different agenda that could block economic reform, lack of agency capacity to utilize infrastructure budgets fully, and a Congress that may be distracted from key legislative agenda for needed economic reform like tax reform by investigations, death penalty reinstatement and the shift to federalism, among others…”

MBC’s survey coincided with the central bank’s own Jan. 5-Feb. 15 first-quarter Business Expectations Survey of representatives of 1,494 firms that showed 39.4% of respondents upbeat about their prospects in the first three months of 2017, “broadly steady” from the 39.8% recorded in the fourth quarter but lower than the 41.9% of 2016’s first quarter.

More companies expected better conditions next quarter at 47.2%, against the fourth quarter survey’s 34.5%.

Eighty-three percent of the senior business executives polled expect gross domestic product (GDP) growth this year to be better or flat from 2016’s 6.8% pace, which was near the top end of the government’s 6-7% target.

The government expects GDP to grow by a faster 6.5-7.5% this year, picking up to 7-8% annually from 2018 to 2022, when President Rodrigo R. Duterte ends his term.

Only 17% of the respondents project slower growth this year.

Eighty-five percent expected the country’s headline inflation — which averaged three percent in 2017’s first two months against the central bank’s 3.4% forecast and 2-4% target range for the full year — to pick up from 2016’s 1.8% average. Roughly 12% expected inflation to stay at the same pace, while three percent project it to be slower than in 2016.

Asked on interest rates, 57% of the respondents foresee a higher 91- day Treasury bill rate than last year’s rate of 1.50%; 39% see interest rates to be relatively flat, while four percent expect to see it moving lower in 2017.

On the peso-dollar rate, 80% expect the peso to depreciate 5.16% against the greenback by yearend 2017 from 2016’s yearend P49.72 that, in turn, was 5.65% weaker than 2015’s P47.06per-dollar finish. The local currency finished trading yesterday at P50.18 to the dollar, 0.93% weaker than its 2016 finish. Some 11% expect the peso-dollar rate to stay flat, while the remaining nine percent expect the local currency to appreciate against the dollar by three percent.

Roughly 29% of respondents expect an increase in investment commitments approved by the government, 24% foresee the same level, while 47% anticipate approved investments this year to be less.

Approved foreign investment pledges totaled some P219 billion last year, 10.7% less than 2015’s P245.2 billion which was an increase of 31% from 2014 level.

The general outlook, however, turned markedly less optimistic on the trade front.

Roughly 53% of respondents expected merchandise export sales either to increase (29%) or stay on the same level (24%) as last year’s level, while close to half (47%) expected lower exports.

About 64% expected lower merchandise imports, 24% expected it to stay the same, while the remaining 12% projected imports to improve.

The country’s trade deficit widened by 61.66% to $2.564 billion last year from 2015’s $1.586 billion, as merchandise imports grew 14.2% to $ 81.159 billion from $71.067 billion while merchandise exports dropped 4.4% to $56.232 billion from $58.827 billion.

CORPORATE OUTLOOK

With this macroeconomic backdrop, MBC survey respondents remained generally bullish on their business prospects.

About 93% expected higher ( 83%) or the same level ( 10%) of gross revenues this year compared to last year, and only seven percent expected gross revenues to be lower than in 2016.

Similarly, 74% of respondents expect higher net incomes, 14% foresee no change, and only 12% expect lower bottom lines.

Some 74% said they will make additional investments, with an average of P785 million.

About 51% plan to expand their work force; 48% see no change, while only one percent see the possibility of laying off workers. —