Business were less upbeat in the third quarter amid high inflation, the Bangko Sentral ng Pilipinas reported.

Results of a BSP survey of companies showed business sentiment weakened in July-September period as the overall confidence index (CI) declined to 26.1 percent from 35.4 percent in the second quarter. 

The lower index resulted from the combined effects of a decrease in the percentage of optimists and an increase in the percentage of pessimists. 

The respondents’ less optimistic sentiment in the third quarter was attributed to: (a) higher inflation (i.e., faster rise in prices of consumer goods, services, raw materials and production costs), (b) rising fuel prices, (c) decline in sales and demand, (d) peso depreciation and (e) the continuing public health threat of COVID-19.

For the next quarter, the business sentiment weakened for the second consecutive quarter as the overall CI decreased to 43.9 percent from 46.4 percent a quarter ago.

For the next 12 months, the business sentiment also declined further as the overall CI decreased to 57.7 percent from the previous quarter’s survey result of 59.9 percent.

Outlook across all types of trading firms is generally less upbeat in the third quarter

By type of trading firm, a less favorable outlook was observed among exporters, importers and domestic-oriented firms as these types of trading firms registered lower CIs in third quarter from a quarter ago. 

Conversely, a more optimistic outlook was noted for dual-activity firms.