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MANILA, Philippines — Philippine retailers, manufacturers and other businesses are bracing for the potential impact of a prolonged Middle East conflict on the local economy, which could, in turn, dampen consumer spending.
“We don’t feel the impact yet, but we’re bracing. We also have to be ready,” Philippine Retailers Association president Alice Liu told The STAR.
Liu said retailers are preparing for a possible belt-tightening among shoppers, as well as the downscaling of the economy.
“We’re still hoping that a resolution will come up pretty soon so that all these supply disruptions will not greatly impact our country and our people,” she said.
SM Supermalls president Steven Tan said the country’s largest mall group has yet to feel the impact of the Middle East crisis, but may do so if the conflict drags on.
“I hope not. So I hope they resolve this as soon as possible,” Tan said.
Liu said the retail industry is one of the most dynamic and vital sectors of the Philippine economy, accounting for around 20 percent of gross domestic product and supporting over 10 million Filipino jobs.
“Retailers are talking among themselves to say how can we minimize the impact of rising fuel prices, rising costs so that the customer does not get hit. Because when customers get hit with the cost, of course they will pull back spending. So these are things that we are trying to do to minimize the negative impact of what we are all worried about,” Liu said.
Given soaring oil prices, Liu said retailers are working with all their mall partners to explore ways to reduce energy consumption.
Federation of Philippine Industries chair Elizabeth Lee told reporters during the group’s summit yesterday that manufacturers are tightening their belts as the ongoing conflict in the Middle East is pushing up fuel and operating costs.
“The immediate thing that we need to do really is to tighten our belts, be more efficient,” she said.
She said part of the belt-tightening measures are conserving electricity and fuel by reducing the number of working days in the factory to four to five from six, cutting unnecessary travel, carpooling for workers and letting workers stay in the vicinity of factories.
While manufacturers are tightening their belts to mitigate the impact of rising costs, she said firms are retaining their workforce.
“Generally, we are not getting information that the manufacturers are letting go of people at this point,” she said.
She said, however, that a prolonged Middle East conflict may affect manufacturers’ expansion plans.
“If it’s going to be a year, we might be in trouble,” she said.
Management Association of the Philippines president Donald Lim told reporters on the sidelines of its general membership meeting that many companies are in a wait-and-see mode.
“The market is very challenging right now. Businesses would always operate on a certain level of certainty. So if it’s a lot of uncertainty, it is hard to do our planning,” he said.
He said companies are considering work-from-home for one to two days a week as part of measures to cut costs.
While companies are exploring ways to mitigate the impact of rising costs, he said that streamlining staff numbers is currently not on the table.
Given the country’s reliance on fuel imports, Lee said the Middle East conflict underscores the need to accelerate the adoption of renewable energy.
She said the rising fuel prices are also expected to drive higher sales of electric vehicles.
Other challenges
On top of ongoing concerns about the potential impact of the Middle East conflict, Liu said the Philippine retail industry also faces challenges posed by emerging trends as the sector moves at an unprecedented pace.
“Along this scale comes growing complexity. Today’s retail landscape is continuously reshaped by digital commerce, artificial intelligence, data-driven operations, evolving consumer expectations and rapidly shifting supply chains,” Liu said.
“Customers now move seamlessly between physical stores, online platforms and social commerce ecosystems. Brands are expected to respond to trends in real time. Technology is redefining how we operate while global uncertainties continue to challenge traditional models of growth,“ she said.
She said retail is no longer simply about selling goods and services, but also about building adaptive organizations that can respond quickly to change while continuing to deliver meaningful experiences for consumers.
For the manufacturing industry, moving up the value chain is challenging given high operating costs. “If we actually deepen our manufacturing here, that’s part of the resilience for the country itself,” Lee said, noting the sector’s contribution to employment.
