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(Infographic) Amid Rising GDP, is it Time to Launch Your Startup?

Data show that buoyant economic growth encourages business formation
By Entrepreneur Staff |



Instinctively, we know that rapid rise in gross domestic product (GDP), a measure of economic output, is good for business. That's probably why many entrepreneurs followed the Philippines Statistics Authority's (PSA) latest announcement that the economy grew by 6.8 percent last year, compared to 5.8 percent in 2015.


To check exactly how GDP impacts businesses, we took a close look at the PSA's Annual Survey of Business and Industry from 2003 to 2014, which counts the number of establishments that employ 20 or more employees. Though the survey was conducted only periodically (not annually as the name suggest), we were able to confirm the notion that a buoyant economy is a boon for the establishment of new businesses.



That could explain why entrepreneurs suddenly find they have more competitors when the economy is doing exceedingly well.


Related Link: China, Vietnam Overtake PH in GDP Growth In Q4


As economic growth picked up in recent years, so did the pace of the founding of new business establishments, according to PSA data. The survey shows that the number of business establishments soared by 11,188 between 2010 and 2014. That pace of growth is almost triple the increase of 3,242 between 2003 and 2010, a period when economic growth was rather sluggish.


Business founders were much busier in recent years when they formed 2,797 establishments a year, representing the net annual change in the number of businesses between 2010 and 2014. In sharp contrast, the net change per year from 2003 to 2010 was only 463, suggesting a much slower pace of business activity.


For those planning to launch a new business or expand existing ones, a buoyant GDP represents a good opportunity to finally do so.



(This is an updated version of a story published last November 19, 2016. The figures were updated after the government released 2016 GDP numbers on January 26, 2017 and the results of the latest Annual Survey of Philippine Business and Industry announced on January 9, 2017.)

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