DESPITE business sentiment improving on hopes of higher holiday-driven spending, Filipino consumers turned more pessimistic as concerns over corruption, inflation and income pressures dampened their confidence, according to the Bangko Sentral ng Pilipinas (BSP).
Results of the BSP’s latest Business Expectation Survey (BES) revealed that the overall business confidence index (CI) increased to 29.7 percent in the fourth quarter of 2025.
A positive CI means more respondents are optimistic than pessimistic.
The current-quarter CI is higher from the 23.2 percent recorded in the third quarter of 2025, due to more consumer spending during the holiday season, improvements in business process, expansion plans and a favorable inflation environment.
However, optimism among businesses moderated for the succeeding quarter.
The CI for the first quarter of 2026 fell sharply to 23.7 percent from 49.5 percent previously, reflecting expectations of weaker post-holiday demand, the adverse impact of corruption allegations on investor sentiment, peso depreciation and higher inflation.
The year-ahead business outlook also softened, with the CI easing to 40.4 percent from 49.5 percent.
Businesses cited governance-related concerns over public works spending, weaker demand, elevated inflation, peso depreciation, and the risk of an economic slowdown as factors dampening sentiment.
The BES is a key economic surveillance tool of the BSP, and its results are important inputs to monetary policy formulation.
Weaker consumer confidence
Meanwhile, results of the BSP’s Consumer Expectations Survey (CES) showed that consumer sentiment turned more pessimistic in the fourth quarter of 2025.
The overall CI dropped to -22.2 percent from 9.8 percent in the previous quarter.
A negative CI means there are more respondents with a negative outlook than a positive outlook.
The BSP said the more negative reading reflected both a decline in the share of optimists and an increase in pessimists.
Consumers pointed to graft and corruption concerns, rising inflation, lower household income, and adverse weather conditions and other natural calamities as the main factors undermining confidence.
Concerns over the effective delivery of government services amid governance-related issues also weighed on sentiment.
For the next quarter, the overall CI declined to 3.6 percent in the fourth quarter of 2025 from 6.9 percent in the preceding quarter.
Meanwhile, the year-ahead CI eased to 11.8 percent from 14.1 percent previously.
The BSP said the less upbeat outlook for both periods stemmed from the same set of concerns cited for the current quarter.
The survey further showed that all three component indices, such as overall economic condition, family financial situation and family income, declined in the fourth quarter of 2025.
The overall economic condition index fell to -48.4 percent, its lowest level in five years.
The family financial situation index also slipped to -14.6 percent in the fourth quarter of 2025 from -7.1 percent in the third quarter of 2025.
Meanwhile, the family income index returned to negative territory at -3.5 percent after three consecutive quarters of positive readings.
Looking ahead to the first quarter of 2026, consumers were more pessimistic about the country’s economic condition, less optimistic about their family’s financial situation and remained positive about family income.
Over the next 12 months, sentiment turned negative for the overall economy, stayed positive for the family’s financial situation, and became more optimistic for family income.
The Q4 2025 CES was conducted from October 1 to 13, 2025. The CES samples were drawn from the Philippine Statistics Authority’s 2023 Geo-Enabled Master Sample for household-based surveys, which is considered a representative sample of households nationwide.