Filipino businessmen have grown less optimistic about their operations and potential profits for the third quarter of the year, according to a survey by the Bangko Sentral ng Pilipinas (BSP).
Factors such as higher prices of raw materials due to bad weather, reduced sales, and weak demand for services have contributed to this declining confidence.
The Business Expectations Survey (BES), conducted between July 5 and August 15, cited elevated inflation and peso depreciation for the drop in the overall confidence index (CI) for the third quarter, which fell from 40.8 percent in the second quarter to 35.8 percent.
Nevertheless, surveyed companies are more bullish about the “Ber” months and the next 12 months, driven by factors like robust demand, increased revenues during the holiday season, improved economic conditions due to the easing of COVID-19 restrictions, expanded business opportunities, and reduced inflation.
For the third quarter, the less optimistic sentiment is attributed to factors like declining sales and demand due to weather-related disruptions, seasonal factors, and rising raw material and production costs.
Looking ahead, businesses anticipate a more positive sentiment in the fourth quarter, with an overall CI of 53 percent, driven by increased demand, better economic conditions, expansion opportunities, and easing inflation.
Over the next 12 months, business confidence remains optimistic with an overall CI of 59.7 percent, driven by brisk demand, an improved business climate, expansion opportunities, and reduced inflation.
The survey also revealed expectations of improved financial conditions and greater access to credit for the third quarter. Businesses expect the peso to appreciate against the US dollar and anticipate rising peso borrowing rates until the end of the year.
Regarding inflation, businesses expect it to remain elevated in the second half of 2023 but anticipate a gradual decline over the next 12 months.