The global business horizon looks dim in 2019, based on a worldwide survey by consulting firm PwC that was released on Monday, on the eve of the World Economic Forum opening in Davos, Switzerland. PwC said the latest edition of its annual survey of CEOs found that 30 percent of respondents feel growth will decline this year, a sixfold increase from a year earlier—when 57 percent of respondents were more bullish.
PwC Chairman Bob Moritz said the responses from more than 1,300 CEOs worldwide showed that business confidence is waning amid rising trade tensions and protectionism. He said the Trump administration’s trade war with China and similar issues with other US trading partners have taken a bite: The survey found that 98 percent of US CEOs and nine in 10 Chinese counterparts voiced concerns about the US-China trade war.
The PwC survey of CEOs in 91 territories was conducted online, in person and by phone in September and October. It found that the souring mood was most pronounced about the United States, noting a 41-percentage point drop in CEOs choosing the US as a top market for growth. This is bad news for the Philippines because the US is one of our top trading partners.
Moritz cited the diminishing US dominance in world affairs, noting how the center of gravity of capital markets had been the US in the last 50 years. “Now you’ve got it shifting a little bit more east” to China and other parts of Asia, he said.
On the same day that China, the world’s second-biggest economy, reported growth of 6.6 percent in 2018, the weakest since 1990, the International Monetary Fund downgraded its 2019 estimate for global growth to 3.5 percent, from the 3.7 percent. “After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising,” said IMF Managing Director Christine Lagarde as she presented the forecasts at the World Economic Forum in Davos. Meanwhile, the World Bank, the Organization for Economic Cooperation and Development, and other forecasters have also downgraded their world growth estimates.
These global shakeups will certainly affect many developing countries, including the Philippines. China’s growth slowdown, for one, can disrupt global supply chains that may bring trade uncertainty in Asia, which will dampen investment. With all these bad news plaguing the world economy, what will drive Philippine economic growth in 2019?
The Philippine Chamber of Commerce and Industry said the Philippines will still remain as one of the more resilient economies in Asia. It said growth this year will be fueled by robust consumer and government spending. The PCCI projects a 2019 growth rate of 6.7 percent because of the upcoming elections and our hosting of the 2019 Southeast Asian Games.
The country’s largest business organization also listed the following, which will help sustain the growth momentum: The Duterte administration’s “Build, Build, Build” program; growth in tourism following Boracay’s reopening; and the surge in foreign direct investments.
As far as attracting investments is concerned, it said the Duterte administration must continue to ensure a level playing field, simplify business regulations, and reduce red tape in the government. It has to continually find ways to encourage investments that will generate jobs not only in urban centers but also in rural areas.