PHILIPPINE businesses grew more optimistic in the fourth quarter of 2025, anticipating stronger consumer spending during the holiday season, despite Filipino consumers becoming more cautious amid concerns over corruption, inflation, and recent natural disasters.
Results of the Bangko Sentral ng Pilipinas’ (BSP) latest Business Expectations Survey showed the overall business confidence index rose to 29.7 percent in the fourth quarter from 23.2 percent in the previous quarter. A positive index means more firms expect economic conditions to improve than to worsen.
Firms pointed to higher holiday-related demand, improved productivity and operational efficiency, the rollout of new products and services, and a favorable inflation environment as key drivers of optimism. Many businesses said stable prices continued to support investment decisions and hiring plans.
Business sentiment remained positive for both the next quarter and the next 12 months, although confidence softened. The quarter-ahead confidence index eased to 23.7 percent from 49.5 percent previously, while the year-ahead index slipped to 40.4 percent from 48.1 percent. Respondents cited the lingering effects of recent natural disasters and the drag of corruption allegations on investor and business sentiment as risks to the outlook.
For the fifth straight quarter, firms also expected inflation over the next 12 months to stay within the National Government’s target range, signaling well-anchored inflation expectations that typically support long-term growth, investments, and job creation.
In contrast, Filipino consumers expressed weaker confidence in the fourth quarter, reflecting pressures on household finances and broader economic concerns. The BSP’s latest Consumer Expectations Survey showed the overall consumer confidence index fell deeper into negative territory at minus 22.2 percent in the fourth quarter, down from minus 9.8 percent in the previous quarter. A negative index indicates that pessimistic views outweighed optimistic ones.
Consumers cited issues of graft and corruption, higher inflation, lower household income, unfavorable weather conditions, and other natural calamities as the main factors dampening their sentiment.
Despite the decline, consumers remained cautiously optimistic about the near-term outlook. Confidence for the next quarter stood at 3.6 percent, while the index for the next 12 months reached 11.8 percent, both in positive territory.
Like businesses, households also expect inflation over the next year to remain within the government’s target range, suggesting inflation expectations are anchored even as current concerns weigh on sentiment.
Both the Business Expectations Survey and the Consumer Expectations Survey serve as key economic surveillance tools for the BSP, providing critical inputs to the central bank’s assessment of economic conditions and its formulation of monetary policy. PR