Corruption scandal drags down business sentiment

Business confidence nosedived in January 2026, according to the latest Business Expectations Survey (BES) by the Bangko Sentral ng Pilipinas (BSP), as lingering effects of the corruption scandal continue to dampen optimism.

In its inaugural round of monthly confidence surveys, the central bank said the Confidence Index (CI) remained positive at 0.9 percent, which “continued to indicate that more businesses are optimistic about the economy than pessimistic.” However, the figure marks a steep fall from 29.7 percent recorded in the fourth quarter of last year.

Firms in Metro Manila, however, were pessimistic in January, posting a CI of –8.0 percent, indicating caution from the country’s business center. Outside the capital region, firms were broadly more optimistic with a CI of 20.6 percent.

The BSP attributed the modestly optimistic outlook of survey respondents to higher consumer demand for garments, education services, loan products, mailing and shipping services, and motor vehicle parts, as well as ongoing business process improvements.

BSP Deputy Governor Zeno Ronald Abenoja previously announced the planned shift to monthly expectations surveys, replacing the previous quarterly releases, at a BSP event in Dumaguete City last month, targeting the first wave within “the first quarter.”

“To improve our ability to capture trends and better understand the structure of the economy, one of our key efforts is increasing the frequency of our surveys,” he said. Abenoja later added at the BSP’s Monetary Policy press conference that results from the monthly surveys would be incorporated into the central bank’s future policy decisions.

Last December, the BSP projected the first-quarter 2026 CI at 23.7 percent, already down from 49.5 percent in the previous survey. The central bank attributed the subdued outlook to “lingering effects of recent natural calamities, together with the negative impact of corruption allegations on investor and business sentiment.”

In 2025, economic growth slowed to 4.4 percent, as a contraction in public infrastructure investment following probes into the flood control scandal, combined with weakening investor and consumer sentiment, weighed on the economy.

As a result, the BSP has cut its key policy rate twice over the past three months to stimulate demand by encouraging banks to inject more liquidity into the economy. The latest cut, announced 19 February, was aimed at restoring confidence in the Philippine economy—an imperative step for recovery, according to central bank chief Eli M. Remolona Jr.

“Our decision today may actually help to restore confidence, boosting investment and consumption. The pace of economic recovery will depend on how quickly confidence returns. As always, policy decisions will be driven by the data we have at the time we make those decisions,” he added.

The BSP said the three-month and full-year CIs rose to 33.3 percent and 38.6 percent, respectively, indicating improving optimism as the government prioritizes infrastructure spending—worth up to P250 billion in the first quarter alone, according to Public Works Secretary Vince Dizon—alongside ongoing investigations into the corruption scandal that have led to the arrests of former Senator Bong Revilla and government contractor Sarah Discaya.