Gov't sees little impact from Middle East conflict

THE ONGOING Middle East conflict has had a "minimal" impact on the Philippine economy, the government said on Tuesday.

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On the other hand, analysts said that another surge in global oil prices may trigger a renewed spike in inflation in the Philippines.

"The impact is so minimal on our economy that it doesn't seem alarming as of now, as long as [global oil prices] don't increase or the conflict worsens," Department of Energy Officer-in-Charge Sharon S. Garin said, quoting the assessment of Department of Economy, Planning, and Development Secretary Arsenio M. Balisacan.

President Ferdinand R. Marcos, Jr. on Tuesday held a meeting with economic managers to discuss the ongoing Middle East conflict.

"The President's order is still that we make sure that we protect the Filipino people from the impact of the oil price hike, meaning, most especially those who use public utility vehicles, our farmers, and our fishermen," Ms. Garin added.

The Philippines, a net importer of oil, is highly sensitive to sharp fluctuations in global oil prices.

"Oil prices are a significant contributor to inflation in the Philippines. Our analysis suggests that a 10% oil price shock contributes 0.3-0.4 percentage point (ppt) to headline consumer price index, all else equal," Krisjanis Krustins, Asia Pacific Sovereign Ratings director at Fitch Ratings told Business World.

However, the "final impact" of the war will rest on the duration and size of the oil price shock, Mr. Krustins said.

After surging on Monday, oil prices fell after US President Donald J. Trump announced a ceasefire between the Iran and Israel. Reuters reported that oil prices duly slumped almost 3% on Tuesday, on top of an almost 9% tumble overnight as the immediate threat to the vital Strait of Hormuz shipping lane appeared to have lessened.

US crude futures are back at $66.80 per barrel, about the lowest since June 11 before Israel's attacks on Iran began.