Philippine business confidence drops to -35.8%

Philippine business sentiment worsened in April as companies worried about rising inflation driven by the ongoing conflict in the Middle East, a report released by the Bangko Sentral ng Pilipinas (BSP) on Friday revealed.

The business confidence index (CI) stood at -35.8% in April, worse than the -24.3% in March. A negative CI means more respondents are pessimistic than optimistic.

“Concerns over the ongoing Middle East conflict, which has kept oil prices elevated, weighed on business confidence in April 2026. Firms reported that higher inflation could raise operating costs and erode consumers’ purchasing power,” the report read.

The survey was conducted from April 7 to 30, 2026, with responses collected from 507 firms across the country, including 193 in the National Capital Region (NCR). Samples were from random sampling of the Top 7,000 corporations in the country based on total assets in 2017.

The survey recorded a 49.9% response rate, with a sampling error margin of ±6.1%.

Inflation clocked in at 7.2% in April, the fastest in three years since the 7.6% in March 2023, due mainly to higher global fuel prices due to the conflict between the United States and Iran, which spilled over to food, local petroleum, and utilities.

With the higher rates, this means that P1 in 2018 is now equivalent to only 73 centavos.

Moving forward, however, local businesses signified optimism as the thrree-month-ahead CI improved to -7.5% from -17.3%, while the 12-month-ahead CI increased to 19.5% from 11.7%.

“Firms were less pessimistic about the next three months mainly because the start of the academic year for most schools is expected to drive demand for loans and financing products, as well as for clothing and apparel,” the BSP said.

“Looking 12 months ahead, they were more optimistic due to anticipated stronger demand for business process outsourcing, construction, and transportation services,” it added.

Respondents also noted expectations of higher sales and income, better overall economic conditions, and a possible resolution of the Middle East conflict.

The Philippines, a net importer of fuel, has been in a state of national energy emergency since March due to the ongoing conflict.

“The BSP continues to closely monitor the impact of the ongoing Middle East conflict on domestic prices and the broader economy,” the BSP said.

“It stands ready to take necessary monetary action to prevent de-anchoring of inflation expectations from the 3-percent target to protect households and businesses,” it added.

The BSP is next scheduled to meet on June 18, 2026, to discuss whether or not a change in key policy settings is warranted amid the current macroeconomic conditions. — BAP, GMA News