German firms bullish on Philippines recovery

(The Philippine Star) - November 28, 2020 - 12:00am

MANILA, Philippines — Almost half of German firms in the Philippines expect their business to pick up in the next 12 months, even as they remain cautious about the country’s economic recovery, a survey of the German-Philippine Chamber of Commerce and Industry (GPCCI) showed.

The GPCCI World Business Outlook Survey Results for Fall 2020 which covered 69 firms showed 47 percent see business development over the next 12 months, an improvement compared to the 20 percent in the Spring 2020 survey.

Around 35 percent said in the latest survey that they expect their business to remain the same in the next 12 months, while 18 percent see it getting worse.

Asked to assess their current situation, 45 percent of German firms consider it satisfactory, while 19 percent see it as good and 36 percent consider it bad.

When it comes to how they see the Philippines’ medium-term economic development however, only 28 percent said they it expect it to become better.

Firms that forecast the country’s economic development to remain the same is at 37 percent, while those expecting the economy to deteriorate is at 35 percent.

As to when the economy is expected to bounce back, only 31 percent see recovery in the coming year, nearly half or 48 percent said they see this happening in 2022, and 19 percent said it may take even longer.

The survey also showed 45 percent of German firms are either not planning to make or lowering their investment in the Philippines in the next 12 months.

In terms of employment, 35 percent said they expect to reduce their workforce in the next 12 months.

German firms identified demand, economic framework, and financing as the biggest risks.

Negative impacts experienced due to the coronavirus disease 2019 (COVID-19) pandemic are travel restrictions (86 percent), postponed and cancelled investments (61 percent), reduced demand for products and services (55 percent) and cancelled orders (49 percent).

To deal with the impact of the crisis, German companies said they implemented cost reductions (78 percent), and accelerated digitization (64 percent).

“Companies already see some light at the end of the tunnel,” GPCCI president Stefan Schmitz said, but noted many risks persist and the uncertainty in the economy remains.

“We are glad to see the upward trend in the Philippines. However, compared to the business sentiment in other countries in the Asia-Pacific region, we are running behind concerning the overall business outlook,” GPCCI executive director Martin Henkelmann said.

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