PH faces major energy shock risk amid war

The global oil price shock is seen creeping deeper into the pockets of Filipinos, as the Philippines is among the Asian economies deemed most vulnerable to the economic impact of the war in the Middle East, according to Washington-based Institute of International Finance (IIF).

- BEN ARNOLD DE VERA

A March 17 IIF report assessed Asia’s vulnerability to the Middle East energy shock, noting that “Thailand, India, and the Philippines appear most vulnerable to rising food and energy costs due to their high weights in CPI [the consumer price index].”

IIF noted that in these three countries, food accounts for more than 30 percent of household spending, leaving them especially vulnerable to rising fertilizer costs.

National Statistician Claire Dennis S. Mapa earlier told Manila Bulletin that over 36 percent of the CPI basket is directly or indirectly vulnerable to rising oil prices. Energy items such as transport fuels, electricity, liquefied petroleum gas (LPG), and kerosene—accounting for 8.23 percent of the CPI—are most directly affected, while agricultural products, meals outside the home, and road passenger transport, which together make up about 28 percent of the CPI, may face secondary impacts from higher transport and raw material costs.

This strain would be intensified by weaker exchange rates, which would raise the local-currency prices of energy and imported food, IIF said.

The Philippine peso plunged to a new record low of P59.87 against the United States (US) dollar last Monday, March 16, as oil risks intensified.