Mideast war threatens PH economy

The Philippine economy is seen to be badly hit by a volatile cocktail of soaring energy costs, double-digit remittance declines, and a multibillion-peso hole in the national budget as the escalating Middle East conflict threatens to derail domestic growth.

- CHINO S. LEYCO and BEN ARNOLD DE VERA

Separate assessments from the Department of Economy, Planning, and Development (DEPDev), the Department of Finance (DOF), and the Bureau of Customs (BOC)—obtained by Manila Bulletin on Tuesday, March 17—reveal a country bracing for a worst-case scenario where Dubai crude oil could spike to $140 per barrel, a move that would fundamentally alter the nation’s fiscal and inflationary landscape.

According to DEPDev Undersecretary Rosemarie G. Edillon, the crisis arrived just as oil prices were already accelerating; Dubai crude averaged roughly $68 per barrel at the start of 2026 before United States (US)-Iran-Israel tensions escalated.

Under a severe "Scenario 2," where the conflict widens, the government projects that domestic diesel prices could surge by as much as 62 percent and gasoline by 52 percent.

This energy shock is expected to drive headline inflation to between 6.3 percent and 7.5 percent in March and April 2026, a sharp departure from the government's prewar baseline forecast of 3.6 percent. Full-year 2026 inflation is estimated to average above four percent—reaching as much as 4.5 percent to 4.8 percent under Scenario 2.