Decline in Q1 2025 outlook: Optimism among Filipino businessmen for the first quarter of 2025 softened as the confidence index fell sharply to 40.3 percent from 56.8 percent in the previous quarter's survey, reflecting concerns over slower post-holiday demand and inflationary pressures.
For the next 12 months, business outlook was similarly less buoyant as the confidence index declined to 56.4 percent from 58 percent in the previous survey.
This was according to the latest Business Expectations Survey report of the Bangko Sentral ng Pilipinas released on Friday, Dec. 20, 2024.
- Stronger optimism in Q4 2024: For the fourth quarter of 2024, however, business confidence surged, with the confidence index rising to 44.5 percent from 32.9 percent in the third quarter, driven by seasonal demand, easing inflation, and improved business operations.
- Sectoral trends: All sectors showed improved sentiment in the current fourth quarter of 2024, except for construction, where optimism declined. Capacity utilization for industry and construction firms rose to 73.9 percent from 71.9 percent.
- Inflation and financial expectations: Businesses anticipate higher inflation and peso borrowing rates for the first quarter of 2025 and the next 12 months, the survey revealed. However, inflation is expected to average within the government’s target range of 2-4 percent, according to the central bank.
- Improved financial conditions: Firms reported better liquidity and easier credit access in the fourth quarter 2024, signaling stronger financial positioning for businesses entering 2025. This coincided with the series of interest rate reductions made by the central bank over the last few months.
According to the BSP, these trends highlight a mixed outlook for businesses, with optimism tempered by concerns over inflation and borrowing costs in 2025.
