Bullish Economic Outlook Characterizes German- Philippine Firms in recent survey

MANILA, Philippines – Businesses involved in German-Philippine economic relations report a bullish local economic development in the next 12 months with both investment and employment figures showing continuous optimism. Meanwhile, the survey identifies key risks that could impact future economic growth, which include economic policy conditions, high energy prices, and challenges related to supply chain disruptions and infrastructure. Additionally, this edition of the survey has incorporated questions regarding diversification measures of companies. These are the results from the Spring 2024 AHK World Business Outlook Survey conducted by the German–Philippine Chamber of Commerce and Industry (GPCCI – AHK Philippinen). 

“It's encouraging to see such confidence from businesses involved in German-Philippine relations, forecasting a bullish local economy. This optimism surely points to a thriving environment in the Philippines for both investment and job creation over the next 12 months." Says GPCCI President Marie Antoniette Mariano. "The series of events in the first quarter of 2024, including German Foreign Minister Annalena Baerbock's visit in January, President Marcos' subsequent visit to Germany in early March, and the convening the 2nd Joint Economic Commission in mid-March, have evidently played a crucial role in bolstering the bilateral relations between the Philippines and Germany.” 

German Businesses’ bullish on 12-month local economic development, investment, and employment  

The Spring 2024 survey reports that half (50%) of the German-Philippine businesses are still optimistic in their business situation. The same trend is reported on company expectations, which showed positive results, with a majority (61%) of the responding firms forecasting confidence in business development for the next 12 months. Notably, the local economic projections in the next 12 months significantly increased by 17 points at 55%. Investments and employment also followed this trend with increased projections at 44% and 61% respectively (from 39% and 54% in Fall 2023). 

Top Risks for German Businesses 

German-Philippine businesses identified their primary challenges, with economic policy conditions topping the list due to complex regulations, frequent policy changes, and extensive bureaucracy creating an unpredictable environment. High energy prices also pose a significant concern, impacting profit margins and operational costs, particularly for energy-intensive sectors like manufacturing. Additionally, challenges such as supply chain disruptions and infrastructure are tied for third, with both factors contributing to operational inefficiencies.  

“To capitalize on the current economic optimism, it's imperative that the Philippine government work closely with businesses to resolve these identified challenges.” says GPCCI Board Director and Policy and Advocacy Chairperson Dr. Marian Norbert Majer. “By working together efficiently, we can ensure that this bullish momentum translates into sustained economic growth.” 

Diversification and Risk Mitigation 

Responding companies have taken proactive steps towards enhancing the resilience of their business operations. As part of their diversification strategies, they have reported expanding their supplier networks and exploring new sales markets to mitigate the risks of future disruptions. However, this diversification is not without challenges. The primary obstacles identified include increased legal and regulatory issues, which respondents ranked as their top concern, followed by difficulties in finding suitable suppliers or business partners, and the high costs associated with expanding business operations. 

Moreover, when assessing their preparedness to handle international crises and geopolitical risks, the confidence level among these companies shows room for improvement. More than half (55%) believe they are only averagely prepared to tackle such challenges, indicating a moderate level of resilience, while only 34% consider their readiness as good. 

“Our network continuously assesses the resilience of German companies' supply chains at their international locations, aiming to significantly mitigate the risk of future disruptions, such as transport interruptions or the sudden loss of production facilities.” said GPCCI Executive Director Christopher Zimmer. “We see that our respondents in the Philippines are actively enhancing the resilience of their operations by expanding supplier networks and venturing into new markets.” 

About the Survey 

The AHK World Business Outlook Spring 2024 Survey in the Philippines was initiated by GPCCI and is participated almost 70 companies related to German-Philippines business relations. The participating sectors are from the services (59%), trade (14%), and the manufacturing or construction sectors (27%). 58% of the respondents have less than 100 employees, 25% have 100 to 1,000 employees, and 17% have more than 1,000 employees. In terms of company type, 48% of the respondents are local companies without a branch in Germany, 28% are subsidiary/branch/representations of a German company, 9% are international companies without a branch in Germany, 8% are international companies with a branch in Germany, and 6% are local companies with a branch in Germany. The AHK World Business Outlook (AHK WBO) is based on a regular DIHK survey among member companies of the German Chambers of Commerce Abroad, delegations, and representative offices (AHK). It encompasses the feedback from more than 4,300 German companies, branches, and subsidiaries worldwide.