BSP: Business Confidence Declines in Q1 2025 Amid Inflation Worries, Post-Holiday Slowdown

Philippine businesses expressed a more cautious outlook for the economy in the first quarter of 2025, according to the Bangko Sentral ng Pilipinas (BSP), citing weaker demand following the holidays and renewed inflation concerns.

Based on the BSP’s Business Expectations Survey (BES), the overall business confidence index (CI) dropped to 31.2% in Q1 2025, down from 44.5% in Q4 2024. The central bank attributed the decline to both fewer optimistic firms and more expressing pessimism.

Businesses flagged reduced consumer spending post-holidays, a general slowdown in business activity, and the risk of rising inflation as key reasons for their subdued outlook. The decline in sentiment was seen across all sectors except construction, where optimism remained stable.

Looking ahead, however, confidence appears to rebound. For the second quarter of 2025, the CI is expected to rise to 45.4%, while the 12-month outlook remains steady at 56.4%, unchanged from the previous survey.

Businesses also foresee inflation climbing slightly, with projections averaging 3.2% in Q1, 3.3% in Q2, and 3.4% over the next year—figures that remain within the government’s 2% to 4% inflation target for 2025–2026.

The latest BES was conducted from January 8 to March 1, 2025, and surveyed 1,527 firms nationwide—582 from Metro Manila and 945 from other regions—selected from the Bureau van Dijk database of the country’s top corporations.