Business confidence sank further in April
Business sentiment in the Philippines deteriorated further in April as firms continued to grapple with the economic fallout from the ongoing Middle East war, with high oil prices spilling over into operating costs and consumer purchasing power.
The latest survey by the Bangko Sentral ng Pilipinas (BSP) showed that the business confidence index (CI) sank deeper into negative territory at -35.8 percent in April from -24.3 percent in March, marking the second straight month of decline.
A negative CI means more respondents were pessimistic than optimistic about the country’s economic prospects during the month, with many firms attributing their downbeat sentiment to the ongoing war.
“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 BSP said in its report.
The central bank added that firms also cited intense domestic competition, weak demand, and high interest rates as among the major constraints affecting business conditions.
Inflation in April accelerated to 7.2 percent, breaching the BSP’s 2- to 4-percent target range anew. In response to the worsening inflation outlook, the central bank raised its benchmark policy rate by 25 basis points to 4.5 percent during its April 23 policy meeting.
Most analysts now expect the BSP to deliver another quarter-point increase at its next meeting in June, potentially bringing total rate hikes this year to 75 basis points and pushing the policy rate to 5.25 percent.
Meanwhile, firms reported worsening financial conditions during the month.
The financial condition index dropped further to -35.5 percent in April from -24.9 percent in March, while the credit access index declined to -9.9 percent from -7.1 percent. Both indicators suggested tighter cash positions and more difficult access to financing.
Expansion plans likewise weakened as only a smaller share of firms expressed intentions to expand operations.
For the next three months, the share of industry firms with expansion plans fell to 14 percent from 28.8 percent previously. Looking 12 months ahead, expansion intentions also declined to 19 percent from 30.7 percent.
Despite prevailing pessimism, the business outlook for the months ahead showed signs of relief.
The three-month-ahead CI improved to -7.5 percent from -17.3 percent, while the 12-month-ahead CI rose to 19.5 percent from 11.7 percent.
For the near term, the BSP said businesses expect the opening of the new academic year to drive demand for loans, financing products, clothing and apparel.
Hiring conditions may also improve in the coming months as firms maintain favorable employment expectations, potentially providing support to the labor market.
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