Elections, global recovery fuel business optimism in RP - survey

MANILA, Philippines - The forthcoming elections and a global recovery from the financial crisis are supporting the growing optimisn among Filipino businessmen of a modest economic rebound this year, a survey conducted by Dun and Bradstreet Philippines Inc. showed.

The New Jersey-based Dun and Bradstreet is the largest and oldest business information company in the world with a global commercial database spanning over 190 countries.

Since 2010 is an election year, Dun and Brandstreet said it allows for optimism as elections in the Philippines are usually accompanied by huge spending, brisk economic activity, and strong private consumption.

“Revival in consumer confidence will drive household spending to achieve modest growth, though this will most likely be lower than those achieved prior to the global financial crisis,” the survey, covering a wide spectrum of the business community, said.

These include the following industries: manufacturing of durables; transportation, communications, and utilities; wholesale; finance, insurance and real estate; services and retail. The survey likewise includes locators in the economic zones.

“Businesses’ expansion plans that were shelved in 2009 are also likely to be rolled out in 2010 as consumer demand continues to stabilize,” the survey noted.

It said the economy is also buoyed by better-than-expected remittances from overseas Filipinos.

At the start of 2009, the Bangko Sentral ng Pilipinas (BSP) estimated that remittances coursed through the banking system would at best record flat growth. By the end of the first semester, the BSP revised upwards its outlook with a three- to four-percent growth for the year.

After the record-setting remittance volume in November last year, the central bank is now making a new forecast of between six- to eight-percent growth in 2010. This despite the sudden fall of the Dubai market which is said to account for four percent of total remittances.

The BSP said remittances, a strong pillar of the Philippine economy for propping up household spending, will not be substantially hit by the debt crisis in Dubai as well as Saudi Arabia and Qatar.

Meanwhile, a third of the survey respondents see increased hiring in the second quarter of the year, a sign that reflects the improving domestic and global economies.

For the construction sector, 38 percent of respondents expect increases in sales volume, up from 29 percent in the last survey. None of the respondents reported negative expectations for the first three months sales, while 76 percent foresee improvement in sales.

However, the transportation, communications and utilities sector, plus the wholesale and retail sectors, see a 12-percentage point drop in overall sales.

“Expectations for net profits are consistent with the anticipated adjustment or improvement in sales and prices in each sector,” the survey said.

But significant drop in sales expectations in the retail sector, however, reduced the optimism in profit outlook.

Seventy three percent of the respondents expect no change in prices, while 22 percent expect selling prices to increase resulting in a four percentage point increase in selling prices compared to the last quarter of 2009.

Finally, overall optimism is backed by improved expectations in employment, which started in the third quarter of 2009.