Economic Expectation for 2003: Same as Last Year
Business executives polled by the Makati Business Club in its latest Executive Outlook Survey expect the economy in 2003 to perform about the same as in 2002. Fifty percent of survey respondents believe that GDP growth in 2003 will match growth in 2002. About one third expect higher growth than last year while almost 17 percent project a slowdown over 2002.

The survey was conducted from January 15-30 with 102 executives or 13 percent of the MBC's members.

Caution for the macroeconomic outlook for 2003 was seen in the indicators for inflation and interest rates. For 2003, majority of respondents now believe both inflation and interest rates will be higher than in 2002. Inflation and interest rates were both on a downtrend last year.

Businessmen also forecast a peso depreciation throughout the year. Three quarters of the respondents say the peso will fall against the dollar by an average of 6 percent.

Executives were generally upbeat on trade, projecting growth for both exports and imports this year. The outlook for investments was a little more mixed, with slightly over a third expecting the investment figures to match last year's - a down year for investments.

Corporate Outlook
The optimism is more apparent in the corporate level. The percentages of respondents who are saying that both gross revenues and net incomes will be higher in 2003 are better than in 2002. Two-thirds believe gross revenues will be higher in 2003. Over half project growth in net income in 2003. The good news is that it appears more Philippine-based companies are expecting to make additional investments this year. The bad news is that the average investment figure in term of million pesos will drop off marginally.

While the uptick in revenues may not have immediately been felt in the labor sector - workforce size will generally remain steady for over 70 percent of respondents' business - there has been a fairly sharp rise in capacity utilization from 68.5 percent in May 2002 to 74.2 percent by end-2002. With minimal changes in inventory positions for both materials and finished goods, we expect manufacturing capacity utilization to hold steady in the first half of the year.

Government Performance
The top five agencies with the highest net satisfaction scores based on business perception of government performance for July to December 2002 were the Bangko Sentral, the Supreme Court, the Department of Tourism, the Department of Trade and Industry, and the Metro Manila Development Authority. MMDA was included in the survey only for the first time during the January 2003 round.

Sixteen out of 36 government agencies received positive net scores in the January 2003 survey round compared to 13 out of 33 government agencies in the July 2002 survey. Also included for the first time in the survey were the Bureau of Customs and Bureau of Internal Revenue (BIR) at the 27th and 32nd spots, respectively. Next to the BIR in the bottom five were the Philippine National Police, followed by the Department of Justice, and tied at the lowest rank, the House of Representatives and the Senate.

Among the positive developments in the economy that respondents cited during the period July-December 2002 were President Gloria Macapagal-Arroyo's decision not to run in the 2004 elections, low inflation and interest rates, MMDA Chairman Bayani Fernando's performance, and economic growth.

Respondents, however, remained concerned about the peace and order situation, graft and corruption, the fiscal deficit, unemployment, and the poor investment climate - issues which have all appeared in the top five concerns of past surveys.