A New High For Business Expectations

22 February 2007 - Business outlook on the economy for 2007 is the most upbeat in 11 years, according to the Makati Business Club’s Executive Outlook Survey undertaken in end-January to early February this year. Eighty-one percent of respondents believe that economic growth in 2007 will be higher than the 5.4% record of 2006. This percentage of optimistic respondents was only overshadowed in July 1996 when 93.9% of respondents believed economic growth would be higher in 1996 compared to 1995.

In the 2006 survey, only half expected 2006 economic growth to be higher than 2005. Majority of respondents this year also foresee a more favorable trend in 2007 for most of the other major economic indicators – lower inflation (61.3% of respondents) and lending rates (66.1%); an appreciating peso (62.9%); and higher levels of investments (74.2%), exports (72.6%), and imports (83.9%).

This brighter outlook for 2007 can very well be an extension of businessmen’s experience in 2006. Asked to enumerate the most positive developments in 2006, respondents cited developments in the economic front, including a healthier fiscal position, stronger peso, lower inflation and lending rates, and growing investor confidence.

With the economy doing well, government efforts this year should be chanelled to other issues which respondents cited as the conduct of clean and honest elections, improving infrastructure, and fighting graft and corruption. These are the top three most important issues that the Arroyo administration should address in 2007, according to majority of survey respondents. They also want to see the passage of measures seen to benefit the business climate, such as the rationalization of investment incentives and renewable energy bills.

On the corporate front, respondents expressed as much optimism for 2007 for their companies. A higher percentage of respondents believe their gross revenues (87.1%) and net income (64.5%) in 2007 will grow over 2006. Moreover a higher percentage than in the previous year said they will expand their workforce in 2007.

As in the past several surveys, respondents ranked the Bangko Sentral and the Department of Finance as the best-performing among 37 government agencies in 2006. Moreover, respondents expressed greater satisfaction in the 2006 performance of the Bureaus of Internal Revenue and Customs and the Armed Forces of the Philippines than in the previous year, giving them the biggest increase in net satisfaction ratings. On the other hand, the biggest reduction in net satisfaction ratings went to the Departments of Local Government, Justice, and Foreign Affairs.

In view of the upcoming May elections, respondents were asked who they would like to see voted into the Senate. The top five names are Manuel Villar, Francis Pangilinan, Francis Escudero, Joker Arroyo, and Ralph Recto.

MBC’s 2007 Executive Outlook Survey was conducted during the period 22 January—15 February 2007 among MBC members. Sixty-two members responded, representing 9.4% of MBC’s total membership. View tables