Optimism reigns: Philippine firms expect stronger economy in 2023

The Philippine economy has received a much-needed boost as business firms have reported a more optimistic outlook for the first and second quarters of 2023, as well as the next 12 months, according to a survey conducted by the Bangko Sentral ng Pilipinas.

The survey revealed a significant increase in overall confidence indices (CIs) for these periods, with a higher percentage of optimists outweighing pessimists during the reference periods.

The positive outlook can be attributed to various factors, including the full reopening of the economy, increased consumer demand for products and services, and new opportunities in healthcare, manufacturing, and construction sub-sectors, as cited by respondents.

All sectors, namely industry, construction, services, and wholesale and retail trade, showed increased optimism for the first quarter, with their respective CIs rising during this period.

While exporters were less optimistic for the first quarter, business outlook across all other types of trading firms was generally more upbeat.

The survey results also revealed that the industry and construction sectors’ average capacity utilization for the first quarter increased to 74.8 percent, up from 72.1 percent in the fourth quarter of 2022.

Moreover, firms expect their financial condition and access to credit to be less tight for Q1.

Despite this positive development, businesses remain wary of a stronger peso, as well as higher borrowing and inflation rates for Q1 and the near term.

However, inflation expectations among businesses may ease in the near term, as the number of respondents who expected higher inflation declined compared to Q4 2022 survey results.

Overall, the survey suggests a much-needed uptick in business confidence, providing a much-needed respite for the Philippine economy.

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