Philippine business sentiment weakened sharply in March and for the coming quarter, as firms grew more cautious over rising fuel costs linked to escalating tensions in the Middle East.
Data from the Bangko Sentral ng Pilipinas (BSP) Business Expectations Survey showed a sharp reversal in sentiment, with the overall confidence index (CI) for March falling to -24.3 percent from 8.2 percent in February. The drop indicates that pessimistic businesses now outnumber optimistic ones.
Expectations for the next quarter also declined, with the CI dropping to -17.3 percent from 37.4 percent in the previous survey. The BSP said the shift reflects weaker confidence in near-term business conditions, driven largely by external risks.
Despite the weaker outlook, firms still expect growth over the longer term, although optimism has moderated. The 12-month ahead CI slipped to 11.7 percent from 51.1 percent.
The BSP attributed the decline to rising geopolitical tensions and persistent inflation pressures, which are expected to dampen household spending and overall demand. As a result, businesses have scaled back hiring plans for both the quarter and year ahead, signaling softer employment prospects.
Some firms, however, continue to pursue expansion, likely reflecting earlier investment decisions made before the escalation of global tensions.
Inflation expectations have also edged higher, with projections for the coming year now above the BSP’s 3 percent target, though still within its ±1.0 percentage-point range.
The BSP said it is closely monitoring developments in global oil markets and geopolitical risks, particularly their potential impact on domestic prices. It added that it stands ready to adjust monetary policy if rising energy costs lead to sustained inflation pressures.
The central bank also reiterated that it has introduced regulatory measures allowing financial institutions to extend targeted assistance to businesses and consumers affected by economic shocks.
The survey highlights growing uncertainty in the business sector as external risks continue to cloud the economic outlook.