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.
“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