This is according to the latest Business Expectations Survey of the Bangko Sentral ng Pilipinas which was published Friday.
In a statement, the BSP said firms predict inflation rates averaging 4.4% in the third quarter, and 4.5% over the next year, exceeding the government’s target range of 2-4%.
Additionally, businesses foresee a weaker peso against the US dollar in the short term but anticipate appreciation over the next year.
Meanwhile, businesses anticipate that borrowing rates may rise in the third quarter of 2024 and the next 12 months — all despite repeated dovish pronouncements by BSP Governor Eli Remolona Jr. that the monetary authority may cut its closely tracked overnight rates by 25 basis points as early as August and by another quarter of a percent in the fourth quarter.
Remolona also said he wants to slash the amount of cash reserves banks are mandated to hold, all of which should theoretically translate to lower borrowing costs of companies and consumers.
For the third quarter of 2024, the central bank survey showed that business confidence weakened further, with the confidence index falling to 43.7% from 48.1% in the first quarter of the year.
The 12-month outlook also turned less optimistic, with the confidence index decreasing to 56.5% from 60.8% in the previous survey.
This decline reflects increased pessimism and concerns over softer demand for various goods and services, ongoing international conflicts, El Niño-induced weather disruptions, and persistent inflationary pressures, the central bank explained.
The survey also indicated mixed sentiments across sectors, with industry and trade showing more optimism, while construction and services remain less buoyant.
Capacity utilization in industry and construction slightly declined to 72%, and firms expect tighter financial conditions and limited credit access in the coming quarters.
