THE country’s business sector remains optimistic for the second quarter of 2025, with the overall confidence index (CI) increasing to 45.4 percent from 40.3 percent in the fourth quarter of 2024, according to the latest Business Expectations Survey (BES).
The survey results reflect a stronger outlook driven by heightened demand, seasonal economic boosts and business expansion plans.
The Q1 2025 BES was conducted between Jan. 8 and March 1, covering 1,527 firms nationwide. These firms represent various industries and include both Metro Manila-based and regional businesses across all 17 regions.
Businesses attribute their improved sentiment to several factors, including increased demand for goods and services due to midterm election-related spending; seasonal uptick in business activities during the summer months; continued positive economic conditions; and planned business expansions.
Firms also maintain a steady level of confidence for the next 12 months, as the overall CI remains unchanged at 56.4 percent.
While business sentiment improved across most regions outside Metro Manila, firms in Calabarzon, Central Visayas, Eastern Visayas and Zamboanga Peninsula expressed a less optimistic outlook due to concerns over weak local demand. On the other hand, businesses in Ilocos, Bicol, Zamboanga, Northern Mindanao and Davao expect stronger demand, increased productivity and easing inflation, contributing to their positive projections.
The business outlook varied across sectors.
While most industries anticipate increased demand and business expansion, the industry sector’s sentiment remained largely unchanged. The services and construction sectors displayed the highest levels of optimism, citing project awards and an improved economic climate as key contributors.
In contrast, firms in the wholesale and retail trade sector showed a more cautious stance due to market competition, a slower business environment and limited working capital.
Employment, expansion plans
The employment outlook for the second quarter saw a decline, with the index dropping to 16.5 percent, indicating a slower hiring pace. However, for the next 12 months, employment prospects appear more positive, with the index rising slightly to 29.6 percent.
Expansion plans in the industry sector also declined, with only 19.4 percent of firms indicating plans to expand in the second quarter this year, down from 23.1 percent in the previous quarter. The decline was seen across most sub-sectors, except for electricity, gas and water, which reported increased expansion intentions.
Moreover, businesses expect inflation to rise in the second quarter and over the next 12 months due to factors such as election-related spending, rising fuel prices, a weaker peso and higher demand for goods and services. The inflation rate is projected to average 3.3 percent in the second quarter and 3.4 percent for the year, remaining within the government’s target range of two to four percent.
Meanwhile, firms anticipate the peso to depreciate against the U.S. dollar in the first half of 2025 before stabilizing later in the year. The exchange rate is expected to average P58.41/USD in the second quarter and P58.52/USD over the next 12 months. Borrowing costs are also projected to rise, which could impact business expansion and investment activities. / KOC