Business sentiment in the Philippines fell to its lowest in eight years during the third quarter, thanks to several adverse factors including rising commodity prices and a weaker peso, survey data from the central bank showed Thursday.
The overall business confidence index dropped to 30.1 in the third quarter, it weakest since the first three months of 2010, the Bangko Sentral Ng Pilipinas said.
The survey was conducted between July 2 and August 29 among 1,466 firms.
Respondents attributed their weaker sentiment to rising commodity prices, overhead costs, raw material shortage, seasonal factors, weakening peso and stiffer competition.
For the fourth quarter, the survey projected a higher score of 42.6 percent versus 40.4 percent in the previous survey. “This suggests that growth may be sustained in the last quarter of 2018,” the bank said.
The more positive outlook was attributed to an uptick in consumer demand during the holiday and harvest seasons, continued increase in orders and projects, business expansion, amid others.
Positive outlook was likewise driven by respondents’ expectations of more favorable macroeconomic conditions in the country for the next quarter, sustained foreign investment inflows and the steady stream of overseas Filipinos’ remittances, the bank said.
The survey also showed that businesses expect inflation to increase, the peso to depreciate, and interest rates to go up for the current and next quarters.
The rate of increase in commodity prices was expected to breach the upper end of the government’s 2 to 4 percent inflation target range for 2018, at 4.7 percent for Q3 2018 and 4.8 percent for Q4 2018.