The business sentiment in the Philippines was more optimistic in the fourth quarter as the overall confidence index (CI) climbed to 44.5 percent from 32.9 percent in the third quarter, Bangko Sentral ng Pilipinas said.

This reflected the combined increase in the percentage of optimists and the decrease in the percentage of pessimists.

The firms’ more bullish business confidence in the fourth quarter was driven by their anticipation of an increase in demand for certain goods and services and the related seasonal uptick in business activities.

In particular, this could lead to increased demand in agricultural products, infrastructure projects, shipping and distribution services, transportation units, enrollment, chemicals, graphics services, among others.

Moreover, the expected easing inflation and lower interest rates as well as the expansion and improvement of business operations buoyed business sentiment.

For the first quarter of 2025, business confidence was less upbeat as the overall CI dropped to 40.3 percent from 56.8 percent in the third quarter of 2023 survey results.

For the next 12 months, business outlook was similarly less buoyant as the overall CI declined to 56.4 percent from 58 percent in the third quarter of 2024 survey results.

Business sentiment across sectors is mostly more optimistic in the fourth quarter of 2024. The fourth quarter business sentiment was more optimistic across all sectors, except in the construction sector, whose outlook was less upbeat.

Business confidence across all types of trading firms was more optimistic in the fourth quarter of 2024. The CIs of importers, exporters, dual-activity (both importer and exporter), and domestic-oriented firms were higher compared with the third quarter of 2024 survey results.

Capacity utilization of industry and construction firms rose in the fourth quarter of 2024. The average capacity utilization of the industry and construction sectors increased to 73.9 percent from 71.9 percent in the third quarter of 2024.

Firms expect financial condition and credit access to improve in the fourth quarter of 2024. Firms expect less tight cash or liquidity positions in the fourth quarter of 2024 as the financial condition index improved.

Similarly, businesses anticipate easy access to credit in the fourth quarter of 2024 as the credit access index (CAI) reverted to the positive territory.

Businesses expect a stronger peso and higher interest rates in the fourth quarter of 2024, first quarter of 2025, and the next 12 months.

Firms expect that the peso may appreciate against the US dollar in the fourth quarter of 2024, first quarter of 2025 and the next 12 months. Further, firms expect that peso borrowing rates may rise for the same periods.

Businesses expect higher inflation rate in the fourth quarter of 2024, first quarter of 2025, and the next 12 months.

Businesses anticipate that the inflation rate may rise in the fourth quarter of 2024, first quarter of 2025, and the next 12 months.

However, inflation expectations may ease in 2025 as the percentage of firms that expect higher inflation decreased vis-a-vis the third quarter of 2024 survey results.

Firms also expect that the inflation rate may average at 3.6 percent in the fourth quarter 2024, and 3.7 percent in first quarter of 2025 and the next 12 months, which are all within the National Government’s 2.0?4.0 percent inflation target range for 2024-2025. Bangko Sentral ng Pilipinas