Philippine business sentiment turned less optimistic in the first quarter of 2025, the Bangko Sentral ng Pilipinas (BSP) said Friday.
The overall confidence index (CI) fell to 31.2 percent from 44.5 percent in the fourth quarter of 2024, reflecting a rise in pessimism and a decline in optimism, the BSP said.
It said the less optimistic outlook for the first quarter was driven by concerns over a post-holiday drop in demand, a slowdown in business activity, and potential inflationary pressures, the central bank said.
The BSP said that for the second quarter of 2025, business sentiment improved, with the CI rising to 45.4 percent from 40.3 percent in the previous quarter.
The 12-month outlook remained positive, with the CI steady at 56.4 percent, unchanged from the fourth quarter of 2024.
Business sentiment was generally less optimistic across most sectors in the first quarter, with the construction sector showing little change.
Trading firms also reported less optimism, with lower CIs for exporters, dual-activity firms, and domestic-oriented firms, while importers saw little change.
Average capacity utilization for industry and construction fell to 71.4 percent in the first quarter from 73.9 percent in the fourth quarter.
Firms anticipate tighter financial conditions and credit access in the first quarter, with a more negative financial condition index and a return to negative territory for the credit access index (CAI).
Businesses expect the peso to depreciate against the U.S. dollar in the first and second quarters, but potentially appreciate over the next 12 months.
They also anticipate higher peso borrowing rates during these periods, the BSP said.
Inflation expectations rose for the first and second quarters, and the next 12 months. The BSP said the average expected inflation rate was 3.2 percent for the first quarter, 3.3 percent for the second quarter, and 3.4 percent for the next 12 months, all within the government’s 2.0-4.0 percent target range for 2025-2026.