Philippine businesses continue to be affected by the Middle East conflict, as confidence in April declined for the second consecutive month. This was driven by concerns that higher inflation could raise firms’ operating costs and erode households’ purchasing power.

Results of the Bangko Sentral ng Pilipinas (BSP)’s latest monthly Business Expectations Survey (BES) showed that the April confidence index (CI) declined to -35.8 percent compared with -24.3 percent in March. A negative CI means more respondents are pessimistic than optimistic about the economy.

However, the economic outlook for July 2026 and April 2027 improved. The three-month-ahead CI increased from -17.3 percent to -7.5 percent, while the 12-month-ahead CI rose from 11.7 percent to 19.5 percent.

The outlook improved on expectations of stronger demand, higher sales and income, better economic conditions, and a possible resolution of the Middle East conflict.

Businesses also reported favorable hiring intentions over the next three and 12 months, which may support labor market conditions. Meanwhile, a smaller share of industry firms indicated expansion plans amid elevated fuel prices and heightened uncertainty.

Firms also expect inflation to remain elevated, with average 12-month-ahead inflation expectations exceeding the BSP’s 4.0-percent tolerance ceiling.

The BSP continues to closely monitor the impact of the ongoing Middle East conflict on domestic prices and the broader economy. It stands ready to take necessary monetary action to prevent de-anchoring of inflation expectations from the 3-percent target to protect households and businesses.

The shift to a monthly BES in January 2026 provides a more timely assessment of business confidence and enables the BSP to respond more promptly to evolving local and international conditions.​ Bangko Sentral ng Pilipinas