A global oil crisis on top of a faltering economy: 'Asan ang salva vida ng bayan'?

THE Philippine economy was in dire straits even before the US-Israel declared war on Iran end of February.

- Dr. Rene E. Ofreneo

The economy crashed in 2020-2021 due to Duterte’s Covid lockdown, Asia's most stringent. Recovery in the first half of PBBM’s term was weak and halting.

As a backgrounder, the Duterte administration used the pandemic as an excuse in engaging in profligate borrowing and reckless spending. In 2020, the economy registered a minus 9.5 GDP growth rate while the debt-to-GDP ratio of 39.6 percent in 2019 rose to 54.5 percent. In 2021, the ratio reached the alarming level of 60.5 percent.

Thus, upon his assumption of the Presidency, Ferdinand Marcos Jr. approved bolder NEDA debt and growth targets: debt-to-GDP ratio to go down below 60 percent and the economy to grow at 6-8 percent annually. Neither had been achieved in 2022-2025. The economy grew 5.6 percent in 2023, 5.7 percent in 2024 and 4.4 percent in 2025. On the other hand, debt simply zoomed upward, with the Marcos administration adding over P5 trillion in over three years. The total national debt stock reached P17.7 trillion in 2025, while the debt-to-GDP ratio of 2025 climbed to 63.2 percent.

The impact of the US/Israel-Iran war on the Philippines is immediate. The oil market disruptions in the Strait of Hormuz and the ensuing increases in global oil prices automatically triggered increases in the cost of fuel, electricity, transport, food and other requirements of daily life.

The foregoing debt statistics reflect a deeper malaise: a weak economy just plodding along. There was a continuous hollowing out of the productive sectors of the economy, as reflected in the stagnant growth of the industrial sector and the continuous decline of the agricultural sector. The latter now accounts for a measly 8 percent of the GDP. This means the country is overwhelmingly dependent on services, which account for 63 percent of the GDP. But even this sector is hollowing out. A study by an economist shows that half a million micro and small enterprises dropped out of the PSA data in 2025.