Biz leaders 'cautiously' optimistic on economic outlook this 2023

COMING from a “wait and see” stance and a recovery mode in 2022, business owners are preparing for abounding opportunities that will arise in 2023 amid fears of global recession and a sharp slowdown.

“We’ve endured a tough year and we’ve survived 2022. Businesses are looking forward to a better year in 2023, banking on the growth foundation we had in 2022,” said Charles Kenneth Co, president of Cebu Chamber of Commerce and Industry (CCCI). He noted that as soon as the government and health authorities eased the Covid-19 restrictions Cebu immediately declared itself “open for business” to help more enterprises recover from pandemic losses.

The Philippine economy posted a 7.6 percent year-on-year growth in gross domestic product for the third quarter of 2022. Despite the recorded growth, faster increases in prices and goods were recorded since the Ukraine-Russia war arose with the latest November inflation hitting eight percent, the highest recorded in 14 years.

“We are entering 2023 still with looming headwinds,” said CCCI’s vice president for business development Jay Yuvallos, citing increasing interest rates, inflation, geopolitical tensions, and overall gloomy economic outlook that are going to continue disrupting businesses.

“We are still cautiously optimistic for 2023,” said Kelie Ko, president of Mandaue Chamber of Commerce and Industry. “Although we are seeing bright spots in a number of sectors, tourism and business process management, to name a few.”

A worldwide downturn in 2023 has been forecasted by many economists because of rising interest rates but Co said, “we shouldn’t worry about this.”

“We don’t have to worry about a recession... We are still expecting some growth, maybe not as fast as this year. Our outlook for next year is still optimistic. We have seen our foreign exchange slowly correcting, oil has gone down, and hopefully, coal and power rates will come down in 2023... There are also high expectations that the Ukraine-Russia war will end this year,” said Co.

Credit rating firm Moody projected that the Philippine economy would close 2022 with a 7.4 percent growth but will slow down to 6.4 percent in 2023.

Government think tank Philippine Institute for Development Studies (PIDS) said the country’s economy will weaken to 4.5 to 5.5 percent as the global economic environment continues to be volatile.

Authors of the PIDS’ recent study “Macroeconomic Prospects of the Philippines in 2022–2023: Steering through Global Headwinds,” “anticipate further rough sailing this year and the next, as the country faces a new set of headwinds, with inflation becoming a global issue and leading to widespread monetary tightening, which presages a broad slowdown.”

Mind-setting

But despite this depressing outlook, Ko said Cebuanos are preparing to see growth this year, especially since they’ve witnessed a certain level of normalcy after the Covid-19 cases waned.

“They are not as bullish as in 2019 but they are preparing for the increased demand. They are gearing up to capture whatever opportunities that will pop up this year,” he said.

Whether the fear of recession will materialize or not, Yuvallos said success in business this 2023 will depend on the mindset of the entrepreneur. He said this will be a good barometer for determining the fate of the country’s economic state.

“Cebu businesses and entrepreneurs are known to be resilient. We are used to dealing with difficult times and we are a fighter despite being left out sometimes. We have shown that, and we want to cultivate that kind of spirit,” he said.

Yu explained that those who decide to bounce back or recover from the crisis will reap rewards since disruptions in business can happen in good and bad times. He also added that collaboration between the private and public sectors will be critical in achieving the desired economic growth.

Tourism

Revenge travel is expected to continue this year. This is an industry that is expected to stimulate growth for the economy.

Compared to the pre-pandemic level, the percentage of domestic flights at the Mactan-Cebu International Airport has already returned to 86 percent, while international traffic is expected to achieve its pre-pandemic levels by the first half of 2023.

“2023 is a very promising year for all of us. I am quite optimistic that we will be experiencing full recovery of our tourism industry, with more foreign tourists coming in from Korea, Japan and even China,” said Ray Go Manigsaca, president and chief executive officer of AppleOne Properties, the developer behind the Sheraton Cebu Mactan Resort and The Residences at Sheraton Cebu Mactan Resort.

“Though we are far from the pre-pandemic numbers, it is a promising time for the hospitality industry, and we only see it continuing to go up next year as more and more people become confident and comfortable to travel again,” he added.

Michael Kempf, general manager of Dusit Thani Mactan Cebu also foresees 2023 as a “build-up year” for hotel businesses as they accelerate efforts in upgrading resort facilities, resulting in the hiring and rehiring hotel personnel.

“International guests will have higher expectations, and this brings a lot of pressure on hoteliers to meet these new travel demands,” said Kempf.

As of Dec. 29, 2022, 2.6 million foreign tourists have already arrived in the country, surpassing the 2.5 million arrivals expected for the year. Banking on this momentum, the Department of Tourism is targeting 4.8 million foreign visitors for 2023.

Retail

Retailers, meanwhile, are bracing for a gloomy 2023. Entrepreneur Robert Go, spokesperson of the Philippine Retail Association-Cebu Chapter said rising prices of goods and services are keeping retailers on their toes. He said consumer confidence is showing a sluggish recovery as rising inflation beats consumers’ take-home pay.

“Retail sales may be flat for 2023,” he said, citing other factors such as the weakening of the peso versus the US dollar, rising interest rates affecting credit to retailers, and production and logistics issues.

“Nothing we can see today shows growth unless the Ukraine and Russia war will end and we see the successful 180-degree opening of China which should improve logistics and normalize production,” said Go.

Real estate

Cebu’s property sector should also benefit from the property sector’s recovery even beyond 2023, according to Colliers Philippines.

“We see this optimism persisting through 2023 as recovery prospects are boosted by strong macroeconomic fundamentals,” the consultancy firm said.” Cebu remains a preferred destination for business process management firms while more retailers are likely to test the Cebu market’s viability, especially for high-end merchandise. Opportunities definitely abound for the Cebu market, and we see more developers positioning to capture recovery in pre-selling condominium take up.”

Property broker Anthony Gerard Leuterio said developers are set to accelerate project launches this year as they anticipate revenge buying of properties to take place. “Buyers especially the millennials, now understand that the real money is in real estate,” said Leuterio, explaining that during the pandemic the world saw a big decline in almost all money-making industries.

“It will be a vibrant 2023 for real estate,” he said.