MBC sees brighter prospects: Most members expect economy to sustain growth momentum

MANILA, Philippines - Most members of the Makati Business Club (MBC) see bright prospects for the economy and their businesses as they expect the strong gross domestic product (GDP) growth posted last year to be sustained this year.

 The MBC’s First Semester 2014 Executive Outlook Survey which polled 73 business executives from Feb. 3 to March 6, released yesterday show that over 52 percent expect the country’s economic growth this year to remain at the same level as last year’s 7.2 percent.

MBC executive director Peter Perfecto said the group’s members see brighter prospects in investments, exports and imports as the drivers of this year’s economic expansion.

The survey noted that 30 percent of the respondents expect the economy to expand at a faster pace this year, while close to 18-percent project lower GDP growth for 2014.

With the economy seen to sustain its strong performance in 2013 this year, majority of the respondents see higher revenues and net profits.

The survey noted that over 78 percent of respondents project their company’s gross revenues to rise above 2013 levels by an average of 18 percent, while none expect a decline this year.

In terms of net income, over 67 percent of respondents anticipate an average 17-percent increase.

As many companies project higher revenues and net income, additional investments are also being made with close to 51 percent of the respondents saying they would pour in additional funds this year at an average amount of P520.4 million.

This, however is lower than the over 59 percent of the respondents who said they would pour in more funds at an average amount of P807 million in the 2013 survey.

In terms of hiring practices, more than half of the firms intend to expand their labor force by close to 15 percent and more than 41 percent will retain their number of workers.

 â€œNone of our member companies plan to lay off or downsize their workforce this year,”

Perfecto said.

 As for its outlook on consumer prices, over 64 percent expect the country’s headline inflation rate this year to be higher than last year’s average of three percent.

In terms of interest rates, over 52 percent see the 91-day Treasury bill rate to remain at the same level as last year’s weighted average of 0.315 percent.

For the yearend peso-dollar exchange rate, nearly 36 percent of respondents anticipate further depreciation of the local currency against the US greenback by an average of 4.5 percent from the P44.40 per dollar rate in end-2013.

Most companies or 73 percent of the respondents are also upbeat the country would attract more investors this year with approved investment pledges seen to surpass last year’s levels.

Majority or over 64 percent also have a positive outlook on the country’s merchandise trade with exports this year seen to beat 2013’s $54 billion.

Despite the upbeat sentiment on the Philippine economy, most of the businesses believe government still needs to put in place measures to improve the country’s global competitiveness standing.

More than 52 percent of the respondents said new tax reforms would have to be adopted to raise the country’s competitiveness ranking.

Of the respondents who said new tax reforms would be needed, more than 26 percent called for the reduction of income tax or corporate income tax rates, while nearly 16 percent mentioned tax incentives.

Close to eight percent meanwhile, do not believe in adopting new tax reforms but noted that more efficient tax enforcement and administration will be required.

Over five percent wanted clearer tax policies and five percent said income taxes should be simplified.