MANILA, Philippines - Most businessmen expect the country's economic growth this year to be at the same level as 2013, but anticipate strong corporate earnings to continue, the Makati Business Club's executive outlook survey showed.
More than 52% of the senior business executives surveyed said they believe GDP growth this year would be the same as 2013, while 30% said it would be better than 2013. Only 18% said that the economy would fare worse this year.
In 2013, the Philippine economy grew by 7.2%, faster than most Asian economies.
MBC Executive Director Peter Perfecto noted the respondents expect brighter prospects in investments, exports and imports to keep driving the Philippine economy this year.
He said the positive business sentiment has spilled over to the corporate level, since none of the companies are projecting a drop in gross revenues this year. "None of our member companies plan to lay off or downsize their workforce this year," he added.
The survey was conducted among MBC members from February 3 to March 6. The respondents represent almost 20% or 73 of MBC's 367 member companies, excluding foreign embassies and trade offices. Nearly 84% of the respondents are in top management.
Majority of the MBC members surveyed were optimistic that this year's gross revenues and profits will be better than 2013.
More than 78% of the respondents anticipate their company’s gross revenues to increase by an average of 18% over 2013 levels. Only 16% say they see no change in the level of gross revenues from 2013. None of the respondents said they expect a decline in gross revenues.
As for net income, over 67% of business executives surveyed said they expect an average of 17% increase in profits this year. Nearly 18% of respondents project no change in the level of net income from 2013, while nearly 3% say they see an average 10% decline in profit.
However, when it comes to investments, there are less companies planning to make additional investments.
Over half of the respondents (51%) said their companies will invest more this year, at an average of P520.4 million. During the same survey in 2013, over 59% of the respondents said they will make additional investments, with a higher average amount of P807 million.
More than half of the respondents' companies (50.7%) will also hire more this year, projecting to increase their workforce by 15%. More than 41% of respondents’ companies will retain their number of workers, and none of the respondents plan to cut their workforce.
More exports, imports
More than 72% of the respondents said they see approved investments to be higher than 2013, while 19% said they expect it to remain the same. For the January to September period in 2013, approved investments stood at P456 billion.
Most of the business executives (64%) say exports will be higher in 2013, while 27% say it will remain at the same level. For imports, 75% of the respondents say it will be higher than 2013, while 17% say it will stay at the same level.
However, 64% of the businessmen polled expect Philippines' headline inflation this year to be higher than last year's average of just 3%. More than 34%, on the other hand, expect inflation to stay at the same rate.
As for the outlook on interest rates, over 52% of respondents say the 91-day Treasury bill rate will remain at the same level as last year’s weighted average of 0.315%. However, nearly 44% expect the 91-day T-bill rate to be higher this year.
Meanwhile, a third of the respondents (36%) expect the further depreciation of the Philippine peso against the US dollar by an average of 4.5% from the P44.40/$ rate in end-2013.
Nearly 33% of respondents expect the peso-dollar rate to remain at the same level by end-2014, and close to 29% of respondents expect the peso-dollar rate to appreciate against the dollar by 6.7%.
Asked if new tax reforms shuld be adopted to raise the Philippines' global competitiveness ranking, more than half of the respondents (52%) answered yes.
In particular, 26% of those who answered yes said the government should reduce individual and corporate income tax rates. Another 16% said the government should consider various tax incentive proposals, while 8% said there should be more efficient tax enforcement and administration.