Bullish, unexpectedly

Things must really be looking good for the Philippines insofar as the economy is concerned. Even the erstwhile government critic Makati Business Club is bullish that gross domestic product, a measure of overall economic activity, will sustain its high growth this year and possibly beyond.

MBC members, whom President Duterte once assailed as a bunch of “elitists,” expressed a general sense of bullishness in the group’s first-semester executive outlook survey for 2017. They were highly optimistic that the local economy would either surpass or sustain last year’s 6.8-percent GDP growth despite the projected increase in inflation and interest rates this year and headwinds from the international front in the form of a more protectionist US trade regime and rising US interest rates. The survey was done from Feb. 2 to March 15 and received responses from senior executives and top management representatives.

Briefly, four out of five executives expected a higher or the same level of GDP growth for 2017 but projected inflation to be faster than last year’s average rate of 1.8 percent. More than half anticipated a higher 91-day treasury bill rate than last year’s 1.5 percent. Four out of five respondents expected the peso to depreciate against the dollar by an average of 5.16 percent by the end of this year.

More interestingly, MBC members expected a positive performance for their companies this year, with 83 percent saying that their gross revenues would be higher, and 74 percent expecting their net income to increase. Three out of four respondents also noted that they would make additional investments in the coming year. Half shared plans to expand their workforce, with the majority of these member-companies planning to hire more workers in the services sector.

Their reasons for optimism included their confidence in the economic team of the administration led by Finance Secretary Carlos Dominguez III, the 10-point economic agenda of the Duterte administration and its alignment with the private sector’s agenda, and the commitment of the government to prioritize infrastructure spending over the next six years. As for risks, they cited Cabinet members who might have a totally different agenda that could block economic reform, lack of capacity to spend infrastructure budgets fully, and a Congress that might be distracted from key legislative agenda for needed economic reforms—such as the tax package—by unnecessary investigations, the restoration of the death penalty, and the planned shift to federalism.

The Bangko Sentral ng Pilipinas also had its own first-quarter Business Expectations Survey from Jan. 5 to Feb. 15 of 1,494 firms. The survey showed 39.4 percent of the respondents upbeat about their prospects in the first three months of 2017. Nearly half, or 47.2 percent, expected better conditions next quarter.

It is heartening to see MBC separate politics from business. As the group’s former chair, Ramon del Rosario, commented at a forum sponsored by the Economic Journalists Association of the Philippines and ING Bank, “whoever is the president, we in the business community will extend our hand of friendship and support.” It is only through a process of collaboration, cooperation and mutual support that the country can move forward, Del Rosario said.

MBC chair Ed Chua was spot-on in saying that the rhetoric—or President Duterte’s frequent tirades against his critics—would always be there because that’s the nature of politics. MBC’s focus is on how it can work with the government in making the country a better place especially for the youth, he said. To be sure, it is best when the private sector and the government work together for the country to flourish. Only by cooperation can they make the environment here more conducive for investments that are needed to generate jobs.