PH firms turn sharply pessimistic amid war
Business confidence in the country plunged in March as companies reckoned with soaring energy costs fueled by the conflict in the Middle East, a crisis that threatens to deepen consumers’ already entrenched pessimism.
A nationwide survey of 515 firms showed the business confidence index tumbled to -24.3 percent in March from 8.2 percent in February, the Bangko Sentral ng Pilipinas (BSP) reported.
The negative reading means pessimists overwhelmingly outnumbered optimists during the month, a shift companies largely attributed to the ongoing war in the Gulf region.
The central bank said firms expect consumer spending to weaken as surging oil prices fan inflation and squeeze household budgets. That could weigh on sales at a time when businesses are already citing stiff domestic competition, weak demand and high interest rates as major constraints on their operations.
The BSP said the financial condition index turned more negative, falling to -24.9 percent in March from -15.2 percent in February. The credit access index likewise slipped to -7.1 percent from -4.0 percent, signaling expectations of tighter cash positions and more limited access to financing.
The outlook for the coming quarter also darkened, while sentiment for the year ahead grew less upbeat. The three-month confidence index swung to -17.3 percent from 37.4 percent, and the year-ahead index dropped to 11.7 percent from 51.1 percent.
The gloom is already weighing on hiring plans. Employment outlook indices slipped to -0.1 percent for June from 27.2 percent and fell to 10 percent for the year-ahead period from 30 percent.
Consumer less pessimistic, but . . .
Still, the BSP said some industrial firms see room to expand.
“Despite prevailing uncertainties, some companies indicated that they would proceed with their expansion plans, as these were already in the pipeline even before the Middle East conflict started,” the central bank said.
Meanwhile, a quarterly BSP survey of 5,358 households showed the consumer confidence index turned less negative in the first quarter, improving to -15.8 percent from -22.2 percent in the final three months of 2025.
Respondents cited expectations of higher earnings, stable jobs, new income sources and more family members joining the workforce.
The data, however, comes with a caveat: The poll was conducted from Jan. 22 to Feb. 5, before the US-Israel war with Iran erupted on Feb. 28. The central bank said any effects of the conflict on consumer confidence and inflation expectations would likely appear in subsequent survey rounds.
Even with the improvement, the data suggest households confronted the oil shock with fragile confidence. The next-quarter confidence index slipped to 1.8 percent from 3.6 percent, while the year-ahead index eased to 9.6 percent from 11.8 percent.
The BSP said the softer outlook reflects lingering concerns over graft and corruption in government, higher inflation and what respondents see as ineffective government policies and programs.
