Falling Business Confidence in the Philippines Due to High Fuel Prices

The recent Business Expectations Survey of the Bangko Sentral ng Pilipinas revealed that business confidence had dropped significantly in March, citing fuel price pressure amid the Middle East tensions as one of the major factors. This was reported by the central bank as being an effect of increased apprehension regarding consumers’ purchasing power, costs, and general business conditions.

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Sharp Drop In Sentiment

The central bank’s monthly Business Expectations Survey showed the confidence index fell to minus 24.3% in March from a positive 8.2% in February. A negative score indicates that pessimists outweigh optimists. This is the weakest performance in almost three decades based on official records.

The results were derived from 515 firms from March 5 until March 31. The BSP said companies expected fuel-driven price pressures to curb consumer spending and raise the cost of basic goods and services. That view adds to the pressure on businesses already dealing with tighter conditions in the domestic market.

In terms of the casino and gaming industry, the Philippines is one of a few nations in Asia to have licensed casinos and online gambling available. In this context, a reduction in business expectations may indicate reduced expectations regarding disposable income and expenditure.

Next-Quarter Outlook

The March survey also showed that sentiment for the next quarter turned negative. The “3-month-ahead” index dropped to minus 17.3% from a positive 37.4%, while the “year-ahead” index fell to 11.7% from 51.1%. This suggests that companies are less optimistic about future conditions compared with last month.

Businesses also reported a weaker financial position and reduced credit access. The financial condition index dropped to minus 24.9%, while the credit access index slipped to minus 7.1%. All these factors lead to a relatively cautious attitude among businesses moving forward.

The BSP added that local competition, inadequate demand, high borrowing costs, and increased petroleum prices are some of the limiting factors mentioned by companies. Businesses also forecast the depreciation of the Philippine peso and higher interest rates in the coming period.

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Gaming Sector Pressure

The softer sentiment could also carry implications for the gaming sector. Observers said lower confidence usually points to weaker expectations for spending, which could weigh on gross gaming revenue. This concern is important in a market where gaming represents a considerable portion of consumer spending.

Indeed, the gaming industry in the Philippines, excluding casinos, managed to produce GGR of PHP396.14 billion ($6.61 billion) for 2025 in a year-on-year comparison, which demonstrated a 6.4% rise from the prior period and indicated that the industry was growing despite the most recent drop in business sentiment.

According to the survey, things can get even worse for businesses if consumers become more reluctant about their spending. With inflationary pressure tied to fuel costs, the potential for softer consumer demand has now become a more immediate concern for businesses.

Interest Rate Outlook

Maybank Securities Inc said the central bank is now expected to raise interest rates by as much as 50 basis points in 2026 as the Iran-driven oil price shock pushes inflation above target. The brokerage said several analysts are forecasting 1 to 2 additional hikes this year, following a recent increase to 4.5%.

Such expectations are adding to the current problems with declining business sentiment and increases in the prices of inputs, as they can contribute to additional challenges in terms of higher interest rates.

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Source: GGR Asia