By Katherine K. Chan, A reporter
BUSINESSES remain optimistic in January as they anticipate higher consumer demand and better practices, and their outlook for the quarter and next year is also bright, showed the results of the Bangko Sentral ng Pilipinas’ (BSP) first monthly business expectations (BES) survey.
The central bank’s BES for January showed that businesses had a current month confidence index (CI) of 0.9%. A positive CI indicates that more respondents are optimists than pessimists.
However, this was below the 29.7% CI in the fourth quarter of 2025.
“The positive attitude of survey respondents in January 2026 was attributed mainly to the expectations of: (a) higher consumer demand for certain products and services (eg, clothing, educational resources, loan products, postal and delivery services, and auto parts), and (b) improvements in business processes,” the central bank said.
The survey also showed that businesses are more optimistic about the next quarter and the next 12 months with CIs of 33.3% and 38.6% respectively.
“Strong consumer and retail demand, improved domestic economic conditions, and a positive investment outlook boosted business confidence for the next quarter and the next 12 months,” the BSP said.
Businesses see the coming dry season supporting consumer demand, while they expect stabilization in government spending and better governance to support investment.
The release of the monthly BES marks the start of regular business reviews, the BSP said.
“The move from monthly to monthly surveys will allow the BSP to monitor business confidence closely and respond more effectively to rapidly changing domestic and foreign developments.”
Earlier, the central bank said it plans to conduct a survey of consumer expectations every month.
This comes as BSP Governor Eli M. Remolona, Jr. previously said they are now putting more weight on their own macroeconomic confidence as the emergence of a corruption scandal related to flood mitigation projects that came to light last year shows the impact of investor sentiment on growth.
FINANCIAL CONDITIONS are strengthening
Meanwhile, firms said they saw strong cash positions and credit access in the first month of 2026.
Their financial condition index, which shows the general business condition considering the level of cash and cash equivalents and the repayment terms on loans, stood at -19.2%.
The credit access index was -0.6% in January. This refers to the area outside the firm, including the availability of credit in the banking system and other financial institutions.
The latest BES also revealed that the average energy consumption in industry and construction reached 69.6%.
“Respondents cited tough domestic competition, insufficient demand, and high interest rates as the biggest business constraints in January 2026,” the BSP said.
Meanwhile, businesses have shown positive hiring intentions for April through January of next year, with the employment situation index for April at 11.3% and for the next 12 months at 23.3%.
“The expansion of the industrial sector is likely to gain momentum in the next 12 months,” the BSP said.
About 14.1% of businesses in the Philippine industrial sector plan to expand in April, while 24.3% expect the same next year.
FINANCIAL EXPECTATIONS
Businessmen interviewed said they expect inflation to drop to 2.2% in January. This was faster than the 2% actual print headlines recorded during the month.
Meanwhile, in April, they see inflation rising to 2.4% and rising to 2.6% over the next 12 months.
All this is within the bank’s annual target of 2%-4%.
“Corporate inflation expectations remain firm,” the BSP said. Inflation is expected to reach 3.6% this year and 3.2% in 2027.
Firms also said they expect the peso to weaken against the US dollar next year, the survey showed.
They expect the peso-dollar exchange rate to average at P58.88 in January and April and weaken to an average of P58.99 in the next 12 months.
The peso traded at P58 to P59 levels in January, and hit a new record low of P59.46 per dollar in Jan.
“Currently, businesses expect that peso borrowing rates may decrease in January 2026, but may increase in April 2026 and in the next 12 months,” the central bank said.
