By Katherine K. Chan, Reporter
Philippine businesses turned less optimistic about the economy in the third quarter amid bad weather and sluggish demand during “ghost month,” a survey by the Bangko Sentral ng Pilipinas (BSP) showed.
Based on its latest Business Expectations Survey, the overall confidence index (CI) for businesses fell to 23.2% in the third quarter, down from the 28.8% in the second quarter and the 32.9% in the same quarter last year.
A positive CI indicates that more respondents are optimistic than pessimistic.
However, this was the lowest CI seen since the 23.9% recorded in the fourth quarter of 2022.
The business confidence index has been on a decline for three consecutive quarters.
“Philippine businesses were less optimistic about the economy in the third quarter of the year,” the BSP said in a statement. “Their dampened confidence was primarily attributed to the slack in demand during the ‘ghost month’ and the onset of the rainy and typhoon season.”
This year, “ghost month,” the seventh month in the Chinese lunar calendar, ran from Aug. 23 to Sept. 21. Some investors avoid making big investments or decisions during this period.
The country also experienced heavy rains and flooding brought by several tropical storms and the southwest monsoon from late July to early August.
“Global headwinds, such as higher US tariffs, geopolitical tensions, and weaker foreign demand, also weighed on business confidence,” the BSP said.
The US began imposing a 19% tariff on goods from the Philippines on Aug. 7.
At the same time, business confidence for the fourth quarter improved to 49.5% from 39.3% previously, as a surge in consumer spending is usually seen ahead of the holidays.
The overall business outlook for the next 12 months eased to 48.1% from 51% the previous quarter.
“Despite the lower year-ahead CI, it remained positive, reflecting businesses’ continued optimism about near-term economic prospects,” the BSP said.
Businesses surveyed also see the peso appreciating against the US dollar in the fourth quarter and over the next 12 months but expect inflation to accelerate further.
“Firms also expect inflation over the next 12 months to remain within the National Government’s target range, indicating firmly anchored business inflation expectations. Within-target inflation supports investments and job creation,” the BSP said.
Businesses expect inflation to have settled at 2.1% in the third quarter, and picking up to 2.3% next quarter, and 2.4% in the next 12 months.
The central bank surveyed 1,523 firms nationwide, 580 of which are in the National Capital Region (NCR) and 943 in areas outside NCR, from July 4 to Aug. 17.
CONSUMERS LESS PESSIMISTIC
Meanwhile, Filipino consumers turned less downbeat in the third quarter, citing more financial opportunities, the results of the BSP’s Consumer Expectations Survey (CES) showed.
Based on the third-quarter CES, consumers’ CI turned less negative to -9.8% from -14% in the second quarter and -15.6% a year ago.
A negative CI means more respondents are pessimistic than optimistic.
“Filipino consumers were less pessimistic in the third quarter of the year, citing new income sources, higher earnings, and more working family members as the main reasons,” the BSP said.
However, consumers showed stronger confidence for the fourth quarter with a CI of 6.9% from 0.6% in the previous survey.
For the year ahead, consumer confidence improved further14.1% from 11.8% previously.
“The more upbeat outlook of consumers for both periods was attributed to expectations of higher income, additional earnings, more job openings, and stable prices of goods and services,” the central bank said.
Meanwhile, consumers expect prices to rise in the second half of the year but see inflation easing in the year ahead.
They see inflation averaging 2.6% in the next 12 months, lower than the 3.7% recorded in the previous survey.
The consumers’ top concerns included rising food prices, limited supply of food and fuel, and the effectiveness of government programs and policies in addressing higher prices.
The latest CES survey was conducted from July 1 to 12, covering 5,493 households, with 2,475 from the NCR and 3,018 from areas outside NCR.
