Philippine consumer confidence improves to −29.8% in Q3 2026 but stays negative

Implications for lenders

Rising consumer confidence can bring more loan applications before repayment capacity improves: unemployment was 6.0% in July and the banks' consumer-loan NPL ratio rose to 5.49%. Lenders, including companies that sell on instalments, should keep approval limits tied to verified income rather than application volumes, and keep collections capacity ready for early arrears. Consumers' concern about higher borrowing costs also argues for clear pricing at the point of sale.

Implications

Facts

Consumers: the consumer confidence index for July–September 2026, based on a nationwide household sample, was −29.8% (up from −42.0% in Q2 2026). The outlook for October–December was −0.8% (up from −16.3% in the previous survey), and for the next twelve months 9.1% (up from 0.2% in the previous survey). Source: BSP Consumer Expectations Survey as reported by the Inquirer. ¹

Expected inflation: consumers expect inflation of 4% ahead and are also concerned about currency weakness, unemployment and higher borrowing costs. Same source.

Businesses: the August business confidence index was −10.9% (up from −20.3% in July); the next-three-months outlook was 24.6% (up from 3.7% in July). Same source. ²

Analysis

Household expectations improved sharply, but current repayment-capacity indicators have not. July unemployment was 6.0% (up from 5.3% in July 2025, PSA) and the banks' consumer-loan NPL ratio rose to 5.49% (BSP). Indonesia's consumer confidence also rose in August to 118.5 (BI), so across the region expectations are running ahead of outcomes.

Counterpoints and uncertainties

The index remains negative, and the improvement depends on external factors such as hopes of calm in the Middle East; it could reverse if those hopes fade.