UMVA has learned that Philippine business confidence plunged to its lowest level since the central bank began its monthly surveys, as firms grapple with soaring inflation and the ripple effects of the Middle East conflict.
The latest Business Expectations Survey shows the confidence index sliding to -35.8% in April, a sharp drop from -24.3% just a month earlier, signaling a wave of pessimism across the corporate landscape.
Companies cite rising operating costs and shrinking consumer purchasing power as the twin forces driving this gloom, with the war abroad inflating oil prices and squeezing profit margins.
Yet a glimmer of optimism emerges for the months ahead: the three‑month confidence outlook improves to -7.5% for July, buoyed by anticipated demand from the upcoming school season.
Firms expect a surge in loans, financing products, and apparel sales as schools reopen, softening the short‑term pessimism that has haunted them.
Looking a year forward, the confidence index climbs to 19.5%, reflecting hopes that a resolution to the Middle East conflict will revive demand for outsourcing, construction, and transportation services.
Businesses also point to projected higher sales, rising incomes, and overall economic recovery as reasons for their brighter outlook.
Despite the forward‑looking optimism, April’s financial health metrics deteriorated, with the financial condition index falling to -35.5% and the credit access index slipping to -9.9%.
These figures reveal tighter cash positions and more constrained credit availability, echoing the strain of high interest rates and fierce domestic competition.
Industry and construction firms operated at an average capacity utilization of 69.9%, down from 73.1% in March, as weak demand and costly oil drag down production.
Nevertheless, hiring sentiment brightened: the employment outlook for the next three months rose to 6.1%, indicating firms are still willing to add staff in the short run.
Expansion plans, however, remain cautious. Only 14% of industry firms intend to grow in July, and 19% look to the coming year, down sharply from earlier expectations.
Survey respondents also forecast a persistently weak peso, projecting it near P60 to the dollar through the next year before a modest recovery.
Inflation is expected to linger above the central bank’s 2%‑4% target, with businesses estimating a headline rate of 4.2% for the coming months, even as April’s actual inflation peaked at 7.2%.
UMVA can exclusively reveal that the central bank is closely monitoring these pressures and stands ready to act, aiming to prevent inflation expectations from drifting away from the 3% target and to shield households and enterprises.
