Sentiment among medium-sized businesses in the Philippines continued to deteriorate in the second half of 2020.
Results of the Grant Thornteon’s International Business Report (IBR) showed only 49 percent of businesses surveyed in the Philippines have a slightly or very optimistic economic outlook for the next 12 months, a five percentage point decrease from six months before and six percentage below the global average.
More than half, 53 percent, of businesses have cited economic uncertainty as the number one constraint on their ability to grow their business.
Other key indicators are also sluggishly turning downwards with 43 percent of businesses expecting revenues to increase over the next 12 months, 2 percentage points lower than in the first half, along with profitability, 47 percent, 3 percentage points down.
While employment increased 6 percentage points to 51 percent, this is below pre-COVID 2019 levels.
Fifty-six percent of the respondents have cited shortage of orders as a constraint. Businesses are also concerned about availability of skilled staff and labor costs with 50 percent of business citing each as a constraint on their ability to grow.
Shortage of finance remains a significant concern for businesses, with 47 percent of firms identifying it as a business constraint over the next 12 months, increasing by 6 percentage points from the number set in the first half of 2020 when the full scale of the pandemic was becoming evident. This is despite record monetary easing and fiscal support provided by the government to businesses in the country as they attempt to alleviate cash flow constraints arising from COVID-19.
“Even with vaccines being rolled out in some markets, the reality is it will still be some time before we return to anything approaching normality. Many businesses have already made transformational changes to their operating models and investments in this area, and this show no sign of abating as everyone looks to ensure they are able to compete in a post-COVID world,” Marivic Españo, chief executive officer and chairperson, P&A Grant Thornton said.