PHILIPPINE businesses are more optimistic about their prospects over the next 12 months, although weak demand, high interest rates and rising operating costs continue to weigh on operations.
The Bangko Sentral ng Pilipinas’ (BSP) August 2026 Business Expectations Survey showed the overall business confidence index for the next 12 months rose to 36.4 in August from 29.4 in July, as firms anticipated stronger demand, easing inflation and improved investor confidence.
Stronger consumer spending in tourism, construction, education and financial services was the leading reason for optimism, cited in 41.7 percent of positive responses.
However, businesses continue to face uneven demand and cost pressures, particularly in sectors exposed to tourism and discretionary spending.
Domestic market fueling growth
Cebu-based restaurant chain Choobi Choobi has reported weaker sales than last year as slower tourism activity and declining South Korean arrivals weigh on customer traffic.
Constantine “Stan” Tanchan, president of Choobi Choobi Flavors Corp., said the company has been strengthening its domestic market to offset the decline in foreign tourist arrivals, particularly in destinations that depend heavily on Korean visitors.
In Bohol, he cited a sharp reduction in flights from South Korea, from about seven a day to just one, reflecting the contraction in the market.
Despite the slowdown, Tanchan said the restaurant chain has been gaining market share among Filipino diners, underscoring the importance of domestic consumption in cushioning businesses against weaker foreign demand.
The company is also managing operating expenses rather than immediately raising menu prices, as higher food costs, particularly for rice and sugar, threaten to squeeze margins and further strain consumers.
Tanchan said the company would consider price increases only when necessary, preferring to absorb or manage cost pressures where possible rather than pass them on to customers.
The BSP survey showed domestic competition remained the most frequently cited business constraint, with 68.7 percent of respondents identifying it in August, up from 59.4 percent in July. Insufficient demand was cited by 33.4 percent, while 27.6 percent pointed to high interest rates.
Average year-ahead inflation expectations eased to 5.4 percent in August from 5.6 percent in July, but remained above the BSP’s two percent to four percent target range.
Cautious expansion
Expansion plans were also mixed. The share of industry firms planning to expand over the next 12 months fell to 17.1 percent from 20.8 percent in July, despite the broader improvement in business sentiment.
Choobi Choobi, meanwhile, is preparing to expand in Boracay, with construction expected to begin late this year or early next year, subject to preparations.
Tanchan said the company would proceed cautiously, prioritizing management systems and operational capabilities before opening additional branches.
He said maintaining consistent operations across multiple locations can be more challenging than opening new outlets, particularly in areas far from the company’s existing base.
Since last year, the chain has been upgrading its restaurant’s look to sustain market presence. The company recently reopened its upgraded restaurant at The Outlets at MEZ2 Estate in Lapu-Lapu City.
The BSP survey also showed an improved near-term outlook, with the overall business confidence index for November rising to 24.6 from 3.7 in July. Firms anticipated stronger demand and increased activity during the holiday season and rice harvest period.
The survey, conducted from Aug. 5 to 31, covered 501 firms nationwide and recorded a response rate of 45.7 percent.
The results point to improving business sentiment, but persistent competition, financing costs and uneven tourism performance continue to influence companies’ pricing and expansion decisions. / KOC