The Bangko Sentral ng Pilipinas (BSP) reported on Friday, May 29, 2026, that overall business confidence in the Philippines fell to a record low in April, driven by concerns over the Middle East conflict, elevated oil prices, and rising inflation.
Business Confidence Index Drops
The BSP's Business Expectations Survey revealed that the overall business confidence index (CI) plunged to negative 35.8 percent in April from negative 24.3 percent in March, indicating that more firms held a pessimistic view of current business conditions. The volume of business activity index also declined to negative 15.3 percent from positive 2.2 percent, while the volume of total orders booked index dropped to negative 15.6 percent from negative 2.7 percent.
Rising Costs and Weak Demand
Firms attributed the downturn to the ongoing conflict in the Middle East, which kept global oil prices elevated, raising operating costs. Businesses also struggled with weak demand and high interest rates. Concerns about faster inflation potentially weakening consumers' spending power further dampened sentiment. The financial condition index fell to negative 35.5 percent from negative 24.9 percent, and the credit access index declined to negative 9.9 percent from negative 7.1 percent, signaling tighter access to financing.
Capacity Utilization Slips
Among industrial and construction firms, capacity utilization dropped to 69.9 percent in April from 73.1 percent in March, indicating that more firms operated below half of their production capacity. Businesses identified stiff competition, weak demand, high borrowing costs, and elevated oil prices as major challenges.
Future Outlook Improves
Despite the grim April data, firms were more optimistic about the coming months. The three-month-ahead confidence index improved to negative 7.5 percent from negative 17.3 percent, while the 12-month-ahead confidence index rose to 19.5 percent from 11.7 percent. Respondents noted that the opening of the school year is expected to boost demand for loans, financing products, clothing, and other consumer goods over the next three months.
Employment and Expansion Plans
Hiring prospects improved, with the three-month-ahead employment outlook index turning positive at 6.1 percent from negative 0.1 percent in March. The 12-month-ahead employment outlook index remained positive at 9.5 percent. However, fewer industrial firms plan to expand operations. Only 14 percent of firms intend to expand within the next three months, down from 28.8 percent previously. For the next 12 months, the share dropped to 19 percent from 30.7 percent, with many citing uncertainty from the Middle East conflict.
Inflation and Peso Outlook
The survey also showed that businesses expect inflation to remain above the BSP's target range of two to four percent. Firms projected inflation at 4.2 percent for April and the next 12 months, and 4.4 percent in the next three months. Companies also expect the peso to stay weak against the US dollar in the near term before improving over the longer term, with projections of P59.90 per dollar in April, P60.14 in three months, and P60.11 in the next 12 months.
The survey covered 507 firms nationwide from April 7 to 30 and recorded a response rate of 49.9 percent.
