Makati businessmen bearish on economy

Top businessmen who helped propel President Arroyo to the presidency in January are now much more somber about prospects under her leadership.

This was the gist of the latest Executive Outlook Survey of the Makati Business Club (MBC), which showed that 71 percent of the executives polled expect economic production to be slower than the four percent recorded last year.

Aside from the slowdown in gross domestic product (GDP), the responding executives also expected weakness in the exchange rate, investments, exports and imports, the survey showed.

The executives, from almost all the top conglomerates in the country, only saw one economic indicator going up — the inflation rate, which has already risen to 6.7 percent for the first half of this year.

The executives surveyed also agreed that the peace and order situation was mainly the cause of the bleak outlook.

The MBC said in a statement that Mrs. Arroyo’s tough stand against corruption, the passage of the power sector reform law and an upswing in government credibility was noted by the respondents.

But it also stressed that peace and order needed to be urgently addressed – the first time there was unanimity on a single item.

MBC executive director Guillermo Luz said the business community is not necessarily dissatisfied with the economic agenda of the Arroyo administration.

"The key is in the implementation," Luz said, urging that government action should be done with "urgency and focus."

Former Finance Secretary Roberto de Ocampo, a member of the MBC board, said that "a good economic team by itself is not enough" and stressed the need for an improved peace and order situation and better delivery of basic services.

The results of the survey, conducted this month with 151 respondents, was a complete reversal of how they felt when the same survey was conducted a week after the President succeeded to the presidency after the ouster of disgraced former President Joseph Estrada.

The MBC had openly supported Mrs. Arroyo’s push to power and joined in protests which led to the removal of Estrada.

But almost six months into her presidency, there was a broad consensus the foreign exchange rate would depreciate with 83.4 percent expecting a depreciation of 6.4 percent over the end-2000 rate of P50.01 to the dollar.

The peso has depreciated by almost eight percent since the beginning of the year.

Almost two-thirds also felt investments would decline as compared to 81.7 percent who felt it would bounce back and increase when they were asked the same question six months ago.

Some 78 percent of the executives also agreed that the economic crunch would translate into more expensive goods and services.