BUSINESS confidence, exports and profitability in the Asean region have strengthened according to the Grant Thornton International Business Report (IBR), a quarterly global survey of 2,600+ business leaders. Business optimism rose to 40 percent from 23 percent three months earlier. Those anticipating increases in exports increased to 27 percent from 20 percent, and those anticipating increases in profitability rose to 38 percent from 22 percent.

Results released by audit, tax, advisory and outsourcing services firm Punongbayan amd Araullo (P&A), Grant Thornton’s member firm in the Philippines, reveals that net 86 percent of Filipino business leaders–a slight decline of two percentage points from last year–have very bright expectations for the country’s economy in the next 12 months. This makes the Philippines only the third most optimistic country in the global survey, but the country remains the most optimistic among the Asean nations.

Further, the survey reveals more Filipino business leaders–56 percent (up 14 percentage points) expect an increase in employment.

However, many still cite a lack of availability of skilled workforce as a business constraint–37 percent (down five percentage points) of local respondents consider it a roadblock to growth.

“Although there’s a slight improvement in our skilled workers compared to last year, the gap between businesses’ hiring appetite and the depth of the local talent pool is still alarming,” says Marivic Españo, chair and CEO of P&A. “This gap is particularly troubling in the face of the Asean Economic Community, where free flow of skilled labor is foreseen. The country needs to cultivate the kind of workforce it needs to stay competitive and prevent our most highly skilled professionals from emigrating for job opportunities abroad.”

This year, the proportion of Filipino business leaders who cite shortage of finance as a business constraint has increased significantly–from 10 percent in 2014 to 27 percent. On the plus side, there’s an increase in expectations for export (from 26 percent to 31 percent), revenue (from 62 percent to 74 percent), and profitability (from 56 percent to 63 percent).

Among the country’s Asian neighbors, Japan remains least optimistic, with business confidence falling to a two-year low. This pessimism is in stark contrast to improving sentiment in China and India, where businesses are forecasting strong profitability growth over the next 12 months.

The IBR reveals that business optimism in Japan fell to -17 percent in Q1, the fifth lowest globally, and the lowest since Q2-2012. Just seven percent of businesses are expecting to increase profits and 71 percent are struggling with low demand. (PR)