Business sentiment stays upbeat

Business remained optimistic in January as they expect higher consumer demand and better processes, with their outlooks for the quarter and year ahead also becoming more positive, results of the the Bangko Sentral ng Pilipinas’ (BSP) inaugural monthly business expectations survey (BES) showed.

The central bank’s BES for January showed that businesses had an overall current-month confidence index (CI) of 0.9%. A positive CI shows that more respondents are optimistic than pessimistic.

However, this was lower than the 29.7% CI in the fourth quarter of 2025.

“The optimistic sentiment of survey respondents in January 2026 was attributed primarily to expectations of: (a) higher consumer demand for certain products and services (e.g., garments, education services, loan products, mailing and shipping services, and motor vehicle parts), and (b) business process enhancements,” the central bank said.

The survey also showed that businesses showed more optimism for the next quarter and the next 12 months with CIs of 33.3% and 38.6%, respectively.

“Stronger consumer demand and sales, improved domestic economic conditions, and more favorable investment prospects lifted business confidence for the next quarter and over the next 12 months,” the BSP said.

Businesses see the upcoming dry season supporting consumer appetite, while they expect the recovery in government spending and better governance to prop up investments.

The release of the monthly BES marks the start of a more frequent assessment of business sentiment, the BSP said.

“The shift from a quarterly to a monthly survey will allow the BSP to monitor business confidence more closely and respond more effectively to rapidly changing domestic and external developments.”

The central bank earlier said it is also planning to conduct its consumer expectations surveys monthly.

This comes as BSP Governor Eli M. Remolona, Jr. earlier said that they are now putting a greater weight on confidence for their own macroeconomic surveillance as the fallout from a corruption scandal linked to flood-mitigation projects that came to light last year showed the impact of investor sentiment on growth.

TIGHTER FINANCIAL CONDITIONS

Meanwhile, firms said they see tighter cash positions and credit access in the first month of 2026.

Their financial condition index, which reflects a business’ general cash position considering the level of cash and other cash items and repayment terms on loans, stood at -19.2%.

The credit access index was at -0.6% in January. This refers to the environment external to the firm, including the availability of credit in the banking system and other financial institutions.

The latest BES also indicated that the average capacity utilization for the industry and construction sectors was at 69.6%.

“Respondents cited stiff domestic competition, insufficient demand, and high interest rates as major constraints to business activities in January 2026,” the BSP said.

Meanwhile, businesses showed favorable hiring intentions for April until January next year, with the employment outlook index for April at 11.3% and for the 12 months ahead at 23.3%.

“Industry sector expansion may gain momentum over the next 12 months,” the BSP said.

About 14.1% of businesses in the Philippine industry sector plan to expand in April, while 24.3% expect the same for the coming year.

INFLATION EXPECTATIONS

Businesses surveyed said they expected inflation to settle at 2.2% in January. This was faster than the actual 2% headline print recorded during the month.

Meanwhile, for April, they see inflation accelerating to 2.4% and picking up further to 2.6% over the next 12 months.

These are all within the central bank’s 2%-4% annual target.

“Business inflation expectations remain well-anchored,” the BSP said. It expects inflation to average 3.6% this year and 3.2% in 2027.

Firms also said that they expect the peso to weaken against the US dollar over the coming year, the survey showed.

They expect the peso-dollar exchange rate to average at P58.88 for January and April and to weaken to an average of P58.99 in the next 12 months.

The peso traded at the P58 to P59 levels in January, even hitting a new record low of P59.46 per dollar on Jan. 15. Based on BSP data, the peso-dollar exchange rate averaged at P59.1622 during that month.

“Meanwhile, businesses expect that peso borrowing rates may decline in January 2026, but may rise in April 2026 and over the next 12 months,” the central bank said.

Source: Business World

War on Iran could push PH inflation to near 4%

An escalation of the conflict in the Middle East could push Philippine inflation toward 4 percent in the coming months, an analyst said.

Bank of the Philippine Islands (BPI) lead economist Emilio Neri Jr. said developments in the Middle East had reintroduced volatility into global energy markets, with direct implications for inflation, interest rates, remittances and the peso.

“A renewed leg higher in global oil prices would amplify second-round effects through transport, electricity, and logistics costs, potentially broadening inflationary pressures beyond food and fuel,” Neri said in a commentary.

Over the weekend, the United States and Israel launched coordinated airstrikes on Iranian targets, prompting Iran to retaliate with strikes across the Middle East.

As the region remains a critical oil supplier, any sustained disruption could affect global supply and inflation expectations, with the immediate transmission channel being energy prices.

Neri noted that Iran produces about 3.3 million barrels per day, making it the fourth-largest producer within OPEC. More crucially, around 20 percent of global oil supply and roughly 30 percent of globally traded crude pass through the Strait of Hormuz, equivalent to about 20 to 30 million barrels per day.

Under a moderate escalation, oil prices could rise to $75 to $80 per barrel, Neri said. A prolonged blockade of the Strait of Hormuz, meanwhile, could see prices surge to $100 to $120 per barrel, and this outcome was said to have around a 33-percent probability.

For the Philippines, higher oil prices could compound existing rice-driven inflation pressures. BPI expects February inflation to have risen from 2.0 percent in January.

The bank’s full-year inflation forecast currently stands at 3.7 percent but Neri said it may be revised after official February data is released this Thursday

“If WTI (West Texas Intermediate) oil holds near $80/bbl through June or monthly rice inflation continues to accelerate, the policy space for further easing could narrow materially, potentially limiting the BSP’s (Bangko Sentral ng Pilipinas) ability to implement further rate reductions this year,” Neri said.

He also warned that the conflict posed downside risks to remittance flows, as nearly 40 percent of overseas Filipino workers are based in the Middle East.

However, cash remittances from the region accounted for just 18 percent, or $6.5 billion, of total inflows of $35.6 billion in 2025, Neri said, “suggesting that while risks are elevated, the overall impact may be contained than imagined unless the conflict significantly escalates.”

Government officials on Tuesday said they were monitoring developments in the Middle East and acknowledged that an escalation or a prolonged conflict would have an economic impact.

With fuel prices a particular concern, President Ferdinand Marcos Jr. said he was considering asking Congress to grant him emergency powers to lower fuel excise taxes if Dubai crude tops $80 per barrel.

He also said fuel subsidies could be provided to the transport and agriculture sectors.

Marcos said that the safety of Filipinos in the region was a priority and urged an end to the conflict.

The Department of Agriculture (DA), for its part, said it was working to manage the impact of the war on Iran on food prices and the farm sector.

The Strait of Hormuz, it noted, was a critical oil trade route and a disruption of supply could affect commodities such as fertilizers and also raise logistics costs.

Costs of imported products like wheat and animal feed could also rise, which may then translate to higher retail prices of bread, pork, poultry and livestock. The DA said this would complicate the government’s efforts in managing food inflation.

The Department of Energy, meanwhile, echoed Marcos’ proposal to reduce fuel excise targets and reiterated the possibility of staggering the substantial fuel price hikes that are expected to result from the conflict.

It also reiterated the president’s claims that fuel supplies remained adequate and were above the mandated minimum, but added that was preparing for a worst-case outcome.

“In this development in the Middle East and with regards to fuel supply, we are hoping for the best, but we are preparing for the worst,” Energy Secretary Sharon Garin said.

Source: Manila Times

2026 Philippine Real Estate Market Outlook: Opportunities in an Uneven Recovery

The Philippine property market enters 2026 in a reset phase. After years of aggressive construction, pandemic disruptions, and rising interest rates, the sector is stabilizing—but not evenly. For buyers, investors, and developers, understanding where the opportunities lie will be key to making smart property decisions this year.

Here’s what to expect in the 2026 real estate market outlook.

A market recovering—but at different speeds

Property analysts expect the sector to grow in 2026, but recovery will vary across segments.

• Residential: Slower recovery in Metro Manila condos due to oversupply

• House-and-lot & provincial markets: Stronger demand

• Office: High vacancies but improving take-up in select areas

• Industrial & logistics: One of the strongest performers

This uneven recovery means location and property type matter more than ever.

Condo oversupply creates buyer opportunities

Metro Manila continues to face elevated condo vacancy levels after a surge of completions in recent years. While this is a challenge for developers, it can be an advantage for buyers.

What this means:

• More flexible payment terms

• Discounts and promos

• Better negotiating power

• Wider inventory choices

For investors with a long-term horizon, 2026 could be a strategic entry point into the condo market before prices stabilize again.

Regional cities are gaining momentum

Growth is shifting beyond Metro Manila. Cities such as Cebu, Davao, Iloilo, and Clark are attracting both investors and end-users due to:

• Lower entry prices

• Infrastructure expansion

• BPO and business growth

• Lifestyle migration trends

These regional hubs are expected to outperform in mid-income housing and mixed-use developments.

Interest rates and financing remain key

Mortgage rates remain higher than pandemic-era lows, but they are stabilizing. This is influencing buyer behavior:

• Some buyers are waiting for lower rates

• Others are taking advantage of promos

• Many are using government financing programs

Developers and brokers who guide clients through financing options will have an advantage in 2026.

Township and master-planned developments lead demand

Large mixed-use communities continue to perform well. Buyers are prioritizing:

• Walkable communities

• Security and amenities

• Access to work and schools

• Long-term property value

Townships and integrated developments remain a safe bet for both investors and homeowners.

What this means for buyers and investors

2026 is not a boom year—but it is a strategic year.

Smart moves in this market include:

• Negotiating aggressively

• Targeting high-growth locations

• Considering pre-selling with flexible terms

• Looking beyond Metro Manila

For serious buyers, this is a window of opportunity before the next property cycle strengthens.

The Philippine real estate market in 2026 is defined by selective growth and cautious optimism. While some segments face oversupply, others are expanding rapidly.

For buyers and investors who understand the trends, this year offers a chance to secure property under favorable conditions—before competition intensifies again.

If you’re planning to buy, sell, or invest this year, working with a knowledgeable real estate partner can make all the difference.

Source: Ziggurat Real Estate