Business Bayani PH

A central bank survey showed a decline in Philippine business confidence in the first quarter of 2024, weighed down by inflation, competition, and bad weather. However, firms are more bullish for the second quarter and the next year, anticipating rising demand and easing price pressures.

The Bangko Sentral ng Pilipinas’ Business Expectations Survey revealed an overall confidence index (CI) of 33.1% for Q1 2024, down from 35.9% in the previous quarter. 

Concerns about inflation, particularly high food and oil prices, competition, and the El Niño phenomenon contributed to the less optimistic outlook.

However, the outlook improved for the second quarter (Q2) of 2024, with the CI rising to 48.1%. Businesses expect a seasonal uptick in tourism and fisheries, project completions, and easing inflation to boost activity. 

This positive sentiment extends to the next 12 months, with the CI reaching 60.8%, driven by expectations of sustained demand, lower inflation, and business expansion.

The survey also found that capacity utilization in the industry and construction sectors increased slightly in Q1 2024. Firms anticipate hiring more workers and potentially expanding production capacities in Q2 and the coming year.

While businesses saw tighter financial conditions in Q1, they expect improved access to credit compared to the previous quarter. 

The survey also indicated that firms anticipate a stronger peso but higher inflation and interest rates in the first half of 2024 and the next year. Inflation is expected to remain above the government’s target range, averaging around 5% for the period.

Overall, the information suggests a temporary slowdown in the Philippine business landscape, but with a strong expectation of recovery in the near future. Filipino business owners should be prepared for short-term challenges but can be optimistic about the long term. Foreign investors should exercise caution in the short term but may find the Philippines an attractive market in the coming quarters.Ⓒ