Businesses in the Philippines entered the final quarter of 2025 with a brighter outlook, banking on a holiday spending surge to boost the economy. This rise in optimism comes even as Filipino households reported growing financial caution, creating a split picture of the nation's economic mood.
Businesses Bullish on Holiday Season and Stable Prices
The Bangko Sentral ng Pilipinas (BSP) released its latest Business Expectations Survey, revealing a significant jump in corporate confidence. The overall index climbed to 29.7 percent for the fourth quarter of 2025, up from 23.2 percent in the previous three-month period. A positive reading indicates that more companies are anticipating an improvement in economic conditions than a deterioration.
Firms pointed to several key drivers for their upbeat mood:
- Heightened consumer demand linked to the Christmas and New Year holidays.
- Ongoing improvements in their own productivity and operational efficiency.
- The successful launch of new products and services.
- A favorable inflation environment that supports planning.
Many respondents emphasized that stable prices continue to underpin their decisions to invest in new projects and hire more staff, providing a solid foundation for growth.
Consumers Wary Amid Inflation and Corruption Concerns
In stark contrast, the mood on the street darkened. The BSP's parallel Consumer Expectations Survey showed household sentiment sinking further into negative territory. The overall consumer confidence index dropped to minus 22.2 percent in Q4 2025, a steep fall from minus 9.8 percent in Q3.
Filipino families cited a heavy burden of concerns weighing on their finances and outlook:
- Persistent issues of graft and corruption.
- Concerns over higher inflation eroding purchasing power.
- Reports of lower household income.
- The disruptive impact of unfavorable weather and recent natural disasters.
This decline highlights the pressure on household budgets even as businesses prepare for a seasonal uptick.
Future Outlook: Cautious Optimism with Clear Risks
Looking ahead, business sentiment remains positive but has softened. Confidence for the immediate next quarter eased to 23.7 percent from 49.5 percent, while the year-ahead index dipped to 40.4 percent from 48.1 percent. Companies identified major risks to the future, including the lingering economic drag from recent natural disasters and the chilling effect of corruption allegations on investor sentiment.
Consumers, despite their current gloom, retained a sliver of hope for the near future. Their outlook for the next quarter entered positive territory at 3.6 percent, and the index for the next 12 months stood at 11.8 percent.
A critical point of agreement between businesses and households is their inflation forecast. For the fifth consecutive quarter, both groups expect inflation over the coming 12 months to remain within the National Government's target range. This alignment suggests that inflation expectations are well-anchored, a key factor that supports long-term economic planning, job creation, and investment.
The BSP utilizes these dual surveys as essential economic surveillance tools. The insights they provide are critical inputs for the central bank's assessment of the economy and its decisions on monetary policy.
