BUSINESS SENTIMENT within the Philippines turned less upbeat within the second quarter amid concerns over the impact of the Trump administration’s tariff policy on the economy, a survey by the Bangko Sentral ng Pilipinas (BSP) showed.
The newest BSP Business Expectations Survey showed the general confidence index (CI) for businesses declined to twenty-eight.8% within the second quarter from 31.2% in the primary quarter, and from 32.1% a yr ago.
This was the bottom recorded CI because the 23.9% logged within the fourth quarter of 2022. It also marked the second quarter in a row that the index declined because the 44.5% CI within the fourth quarter of 2024.
The survey was conducted from April 4 to May 19, covering 1,527 firms nationwide.
A positive CI indicates that more respondents are optimistic than pessimistic.
“Philippine businesses were cautiously optimistic concerning the economy within the second quarter of the yr. They were primarily concerned concerning the potential impact of reciprocal tariffs on Philippine exports to the USA and uncertainty over their implementation,” the BSP said in a report.
In April, US President Donald J. Trump announced a baseline 10% tariff on all its trading partners, in addition to higher reciprocal tariffs on some countries. The Philippines was slapped with a 17% tariff, the second lowest amongst Southeast Asian countries.
While the reciprocal tariffs have been paused for 90 days until July 9, the baseline 10% tariff stays in place.
“The expected slowdown in business activity after the May midterm elections and the sugar off-milling season also weighed on business confidence,” the BSP said.
Businesses turned less optimistic for the third quarter, with the CI falling to 39.3% from 45.4% within the previous survey. This was the bottom since 38.2% within the fourth quarter of 2023.
For the following 12 months, firms were less upbeat, with the CI dropping to 51% from 56.4% within the previous quarter.
The BSP said businesses cited “expectations of fewer clients and orders as a consequence of expiring contracts and softer market conditions as a reason for his or her more cautious year-ahead economic outlook.”
Survey respondents expect the peso to understand against the dollar over the following 12 months but see an uptick in inflation.
Firms expect the peso to average P57.09 per dollar within the second quarter, P57.12 in the following quarter, and P57.14 for the following 12 months.
Firms also see inflation averaging 2.8% within the second quarter, 2.9% next quarter, and three% for the following 12 months.
CONSUMER OUTLOOK
Meanwhile, Filipino consumers were more pessimistic within the second quarter but turned positive of their outlook for the third quarter, in keeping with the BSP’s latest Consumer Expectations Survey (CES).
The survey showed the CI within the second quarter fell to -14% from -13% within the previous quarter, as consumers cited “higher inflation, lower family income, and fewer job opportunities” as the explanations for the downbeat sentiment.
A negative CI means more respondents are pessimistic than optimistic.
For the third quarter, the CI turned positive at 0.6% from -0.5% within the previous survey.
Consumer sentiment for the following 12 months dipped to 11.8% from the 12.4% within the previous survey.
Filipino consumers attributed the positive outlook to higher household income, more jobs and moderating inflation.
“Households expect that the inflation rate may increase in mid-2025 and over the following 12 months. Nonetheless, inflation expectations are expected to ease during this era because the corresponding inflation rate diffusion indices declined from their Q1 2025 levels,” the BSP said.
Consumers expect inflation to average 3.7% in the following 12 months, a tad lower than the three.8% within the previous survey.
For the second quarter CES, the BSP surveyed 5,444 households from April 2 to fifteen. — A.M.C.Sy