Philippine-German companies see zero, lower investment

GPCCI

Almost half of German companies and their partners in the Philippines expect zero or lower investment in the next 12 months as economic recovery remains uncertain amid a global coronavirus pandemic.

More than a third of these companies saw their current situation as “bad,” while 45% said theirs was “satisfactory,” according to the results of a German-Philippine Chamber of Commerce and Industry poll.

Only 19% rated their condition as “good,” it added.

“The number of companies that plan no or lower investment in the next 12 months fell from 56% in spring 2020 to 46% in fall 2020,” according to the study.

German-Philippine companies that expect higher investments remained below a fifth, though higher than 13% before.

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“We are glad to see the upward trend in the Philippines,” Executive Director Martin Henkelmann said in a statement “However, compared to the business sentiment in other countries in the Asian-Pacific region, we are running behind concerning the overall business outlook.”

The group held its fall survey from Sept. 30 to Oct. 19. It had collected 69 responses, 21% of which came from industry and construction, 22% from trade and 57% from services.

Almost half or 47% of the companies expect to see a better situation in the next 12 months, followed by 35% who said the situation would be “about equal.” Only 18% were pessimistic.

It added that 29% of companies expected things to worsen versus 24% who expected better economic conditions. It said 37% of these companies thought economic development in the next 12 months would be “about equal.”

The German business chamber said 35% of companies polled expected a slimmer workforce in the next 12 months, while 38% said jobs would be “about equal.” A larger workforce was expected by 27%.

The companies identified demand (64%), economic policy (58%) and financing (51%) as the top risks to development in the next 12 months.

Almost all of the respondents (86%) said travel restrictions were “the most damaging impact” brought by the COVID-19 pandemic, according to the study.

Also a major effect of the pandemic was the cancellation or postponement of investment, according to 61% of the respondents. This was followed by less demand (55%) and cancellation of orders (49%).

The German chamber said 78% of these companies were cutting costs, 64% were increasing digitization and 54% were postponing or canceling investment to cope with the health crisis. It said 41% were cutting jobs (41%), 23% were changin their supply chains.

Almost half or 48% of the respondents expect to recover in 2022, while 31% expect to recover next year.

“Companies already see some light at the end of the tunnel,” German-Philippine Chamber of Commerce and Industry President Stefan Schmitz said in the statement. “However, many risks persist and the uncertainty in the economy remains.” — Arjay L. Balinbin