MANILA - Business confidence declined in the last three months of the year due to concerns over the direction of President Rodrigo Duterte's foreign policy and a weak peso that is hurting importers, the central bank said Friday.
The over-all confidence index in the fourth quarter fell to 39.8 percent, its lowest in two years, from 45.4 percent in the third quarter, the Bangko Sentral ng Pilipinas said.
The outlook for the first three months of 2017 also slipped to 34.5 percent from 56.8 percent as measured in the July to September period this year, the BSP said.
"Despite the usual uptick in demand during the Christmas season, business outlook was less buoyant for the current quarter," the bank said.
It cited "perceived concerns over the direction of foreign policies and economic reforms in the country, weakening global demand, foreign exchange losses of importers due to peso depreciation and lack of supply of raw materials."
Decreased optimism for the first three months of 2017 was due to the expected taper in consumer demand after the holiday season and uncertainties over the new US government under president-elect Donald Trump.
Duterte has sought to distance the Philippines from its long-standing ally, the United States, while building closer ties with Washington's rival, Beijing.
Electronics exporters said Thursday some $50 million in supply deals have been cancelled since Duterte started spewing sharp rhetoric against the US.
The peso on Thursday slipped to the P50 against the dollar, a level not seen since the 2008 global financial crisis as the specter of faster inflation in the US sparked a selloff in bonds and boosted the dollar.