‘Mideast conflict poses risks to Philippines growth’

Upgrade to High-Speed Internet for only ₱1499/month!

Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.

Visit Suniway.ph to learn

April 7, 2026 | 12:00am

MANILA, Philippines — The Philippine economy is expected to grow at a faster pace of 5.3 percent this year from last year’s 4.4 percent but the ongoing Middle East conflict is seen to pose risks, according to the Association of Southeast Asian Nations Plus 3 Macroeconomic Research Office (AMRO).

Research and analysis firm BMI also projected a higher growth of 4.7 percent for the Philippines for this year although this is slower compared to an earlier forecast of 5.1 percent.

AMRO’S growth forecast for the Philippines, contained in the ASEAN+3 Regional Economic Outlook 2026 report released yesterday, is within the government’s five to six percent growth target for the year.

It is also unchanged from AMRO’s growth forecast provided in January, despite the ongoing conflict between the United States and Iran that has triggered oil price spikes.

“I think there was a strong momentum in growth in the Philippines prior to the escalation of the conflict. It’s driven a lot by domestic demand activities,” AMRO group head and lead economist Allen Ng said in a press conference.

If not for the Middle East conflict, he said the growth forecast for the Philippines would have been higher.

For next year, AMRO is forecasting the Philippines’ gross domestic product growth at 5.8 percent.

The 2027 growth forecast is also within the government’s 5.5 to 6.5 percent growth target.

With 98 percent of the Philippines’ oil supply sourced from the Middle East, AMRO expects inflation to trend upwards and average 3.9 percent this year before easing to 3.6 percent next year from 1.7 percent last year.

Back in January, AMRO said it expects inflation to average 3.2 percent this year.

Inflation rose to a 13-month high of 2.4 percent in February, bringing the average in the first two months of the year to 2.2 percent.

Given upside risks to inflation, AMRO chief economist Dong He said that the Bangko Sentral ng Pilipinas (BSP) may have to adopt a wait-and-see approach.

“We don’t see space for cutting rates at the moment because we see upside risks to inflation in the Philippines,” he said.

The BSP left key rates unchanged at 4.25 percent during last month’s surprise off-cycle meeting.

“The policy advice is really to probably wait and see and see how long the shock will last,” He said.

Should inflationary pressures and the supply shock persist, he said the central bank may need to react.

Given the current environment, AMRO also believes the Philippines should focus on timely and well-targeted support for the most exposed sectors and households.

BMI, for its part said it was shifting toward an “Extend to End” scenario, in which oil prices remain higher for longer,”

“We are revising down our growth forecast for 2026 from 5.1 percent to 4.7 percent to reflect our shift toward the ‘Extend to End’ scenario, in which oil prices remain higher for longer,” the Fitch Solutions unit said in a report.

Under this scenario, BMI expects the conflict between the United States and Iran to continue for up to another four weeks and to disrupt oil markets, with the Strait of Hormuz effectively closed for the duration of the conflict.

In this scenario, BMI also expects oil prices to trade in the $130 to $150 per barrel range over the second half of this month before gradually unwinding as trade flows are restored.