Lalamove: Slowing demand, high costs weigh on SME outlook

SMALL and medium enterprises (SME) in the Philippines are entering 2026 with guarded optimism as slowing consumption, elevated costs and lingering uncertainty cloud their outlook, according to a survey by delivery platform Lalamove Philippines, Inc.

About 61% of SMEs surveyed said they remain “cautiously optimistic” about next year’s business environment, while 22% reported an uncertain view, the company said in a statement.

Most respondents flagged persistent financial pressures as their main risk: 83% expect high borrowing costs and inflation to restrain expansion.

The Bangko Sentral ng Pilipinas has cut benchmark rates by 175 basis points since August 2024, bringing the policy rate to 4.75%, the lowest in three years. Inflation slowed to 1.7% in October, unchanged from September but softer than 2.3% a year earlier.

Even so, SMEs continue to grapple with weaker household spending and elevated logistics expenses.

Lalamove said 82% of respondents expect sluggish consumption to limit growth in 2026, while 72% cited rising transport and delivery costs as a major constraint.

Household consumption rose 4.1% in the third quarter, cooling from 5.3% in the previous three months, as a corruption scandal involving flood control projects weighed on sentiment.

“While the survey highlights optimism, SME respondents remain careful in their business decisions because of several persistent challenges,” Lalamove said.

Despite the cautious tone, many businesses are preparing for a seasonal boost. Sixty percent of SMEs plan to increase inventories ahead of the holidays, while 37% intend to adjust delivery timelines.

Lalamove said this reflects expectations that Christmas spending would hold up despite recent storms and political tensions.

About two-thirds of respondents think consumers will continue preparing for traditional festivities, while 72% said on-demand logistics services remain their most critical operational resource.

Affordability was the top consideration in choosing a delivery partner, followed by speed and safe handling.

Lalamove surveyed about 500 respondents — mostly SMEs — from September to October. Smaller firms account for more than 99% of registered businesses in the Philippines and generate roughly 40% of economic output. — Beatriz Marie D. Cruz