Philippine businesses grew more pessimistic in April as the ongoing Middle East conflict fueled concerns about higher inflation, rising operating costs, and weaker consumer spending.
Confidence Index Drops
The latest monthly Business Expectations Survey (BES) of the Bangko Sentral ng Pilipinas (BSP) showed the confidence index (CI) fell to -35.8 percent in April from -24.3 percent in March, marking a second straight monthly decline. A negative CI indicates that more firms are pessimistic than optimistic about the economy.
Outlook for the Months Ahead
Despite the weaker sentiment, businesses expressed a more positive outlook for the months ahead. The three-month-ahead CI improved to negative 7.5 percent from negative 17.3 percent, while the 12-month-ahead CI climbed to 19.5 percent from 11.7 percent. Firms cited expectations of stronger demand, higher sales and income, improved economic conditions, and a possible resolution of the Middle East conflict.
Businesses also reported favorable hiring plans over the next three to 12 months, which could support labor market conditions. However, fewer firms in the industrial sector signaled expansion plans amid elevated fuel prices and persistent uncertainty.
Inflation Expectations
Companies likewise expect inflation to remain elevated over the next 12 months, with average inflation expectations staying above the BSP's 4.0-percent tolerance ceiling. The BSP said it continues to monitor the impact of the Middle East conflict on domestic prices and the broader economy and stands ready to take monetary action to keep inflation expectations anchored to its 3-percent target.
The central bank noted that its shift to a monthly BES beginning January 2026 allows for a more timely assessment of business sentiment and enables faster responses to changing local and global economic conditions.
