Business sentiment in the Philippines showed a decline in confidence during the second quarter of 2024 as demand for goods and services fell, a report from the Bangko Sentral ng Pilipinas released on Friday showed. 

In the Business Expectations Survey of the Bangko Sentral ng Pilipinas, lower demand for construction supplies, personal care, health, and other consumer products is reflected in firms’ sentiments 

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Services for city hotels, restaurants and manpower also saw a slowdown in demand. Business activities were also affected by the El Nino phenomenon, it said. 

Firms also see overseas geopolitical conflicts to possibly affect oil prices alongside persistent high inflation that may result to lower consumer spending. 

Business outlook of trading firms showed less optimism in Q2 except for importers registered higher optimism. 

“This was due to their anticipated higher demand for travel agency services for out of town and overseas trips as well as airconditiong systems amid the hot dry season. While for exporter and domestic-oriented firms, their decrease in optimism was due to lower demand for health and other consumer products, lower demand for construction supplies and manpower services… the season-decline in revenues amid the end of school year 2023-2024,” BSP Senior Director Redentor Paolo Alegre said.  

Looking ahead, business optimism for the third quarter of 2024 and for the next 12 months also waned as firms expect weaker peso, inflation breaching 4 percent which is the government’s upper end of the target, and higher interest rates. 

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On the other hand, consumers were more pessimistic in Q2 due to higher inflation, lower income, and less job openings. 

Consumer sentiment also showed less confidence in the effectiveness of government policies in managing prices of goods, traffic, public transportation, and employment. 

With persistent inflation, consumers were more hesitant in spending on big-ticket items as more households with savings decreased.