Before Mideast war, Philippine businesses more bullish

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March 30, 2026 | 12:00am

MANILA, Philippines — Philippine businesses grew more optimistic about the year ahead, with a Bangko Sentral ng Pilipinas (BSP) survey showing improved sentiment before geopolitical tensions clouded the outlook.

The BSP’s latest Business Expectations Survey (BES) showed that the confidence index (CI) for the next 12 months jumped to 51.1 percent in February from 38.6 percent in January, signaling stronger optimism among firms on sustained demand and economic conditions.

The survey, conducted from Feb. 5 to Feb. 28, was completed before the escalation of geopolitical tensions in the Middle East, suggesting that the upbeat outlook may not yet reflect emerging risks tied to rising oil prices and financial market volatility.

Businesses attributed their more positive outlook to expectations of stronger demand for goods and services during peak and holiday seasons, higher productivity as well as improved economic and investment prospects supported by government spending and governance reforms.

Shorter-term expectations were also more favorable. The three-month-ahead CI rose to 37.4 percent from 33.3 percent, with firms anticipating firmer consumer demand during the summer season, favorable weather conditions and increased public works spending.

Sentiment on current conditions also improved. The current-month CI increased to 8.2 percent in February from 0.9 percent in January. The pickup in confidence during the month was driven by expectations of higher income and sales, better domestic economic conditions and improved investor confidence.

Operational indicators showed mixed trends. Firms reported an easing in cash constraints, with the financial condition index improving to -15.2 percent in February from -19.2 percent in January. However, access to credit worsened, with the index turning more negative to -4 percent from -0.6 percent previously.

Average capacity utilization in the industry and construction sectors declined to 67.2 percent from 69.6 percent, reflecting fewer firms operating at high capacity levels. Businesses cited stiff domestic competition, insufficient demand and high interest rates as the main constraints to operations during the month.

Labor market signals, meanwhile, strengthened. Hiring intentions improved, with the employment outlook index for the next three months rising to 27.2 percent from 11.3 percent, while the 12-month outlook increased to 30 percent from 23.3 percent.

Despite stronger hiring prospects, expansion plans among industry firms softened, with fewer companies indicating plans to expand over both the next quarter and the next year.

On the macroeconomic front, firms expect inflation to edge higher but remain within target, averaging 2.3 percent in February, 2.5 percent in May and 2.7 percent over the next 12 months.

They also see the peso averaging 58.94 per dollar over the next year, although the currency has since weakened to a record low of 60.55 against the dollar. The BSP also said firms expect borrowing rates to decline in the near term before rising over a longer horizon.

The survey covered 502 firms nationwide, with a response rate of 48.6 percent, providing an early snapshot of business sentiment before global uncertainties intensified.