Amid MidEast fallout, PH economy likely grew by just 3.1% in Q1, says UA&P
Early signs of a Philippine economic recovery have faltered amid the escalating Middle East war, which has sent energy shocks rippling across the economy and may trigger another disappointing first-quarter growth.
Economists at the University of Asia and the Pacific (UA&P) have once again scaled back their outlook for the Philippine economy in the first quarter, revising their gross domestic product (GDP) projection to 3.1 percent from 3.3 percent earlier.
Although this is above the fourth quarter’s 3-percent growth, it still falls far short of the government’s 5-percent to 6-percent target.
“The ‘green shoots’ in economic data that we saw last month have withered with the escalating Iran war and the corresponding surge in crude oil prices,” UA&P said in its latest publication.
“The latest economic figures, especially the decline in the number of employed people in January—even before the Iran conflict—suggest that GDP growth for Q1 2026 will remain weak at 3.1 percent year on year,” it added.
To recall, the number of unemployed Filipinos rose to 2.96 million in January, translating to an unemployment rate of 5.8 percent, the highest since June 2022.
Inflation, meanwhile, surged to a 13-month high of 2.4 percent in February, with UA&P projecting it could spike to 4.2 percent in March if oil prices continue to surge.
“Inflation may continue climbing until crude oil prices stabilize or decline, as more producers respond to higher prices and as Iran and the U.S. allow additional tankers to transit the Strait of Hormuz,” UA&P said.
As it is, the Department of Economy, Planning and Development (DepDev) has offered an even bleaker scenario. Assuming crude oil prices hit $200 per barrel for 180 days, inflation could reach as high as 8.9 percent in March and 14.3 percent in April. Full-year inflation is seen to average 7.3 percent to 8.6 percent for 2026, which is double the 2-percent to 4-percent target range.
In terms of GDP, DepDev Secretary Arsenio Balisacan has conceded that the Philippines is likely to record growth below 5 percent this year.
“The local bond market outlook has worsened following the U.S.-Israel missile strikes in Iran on Feb. 28. Crude prices have surged to around $100 per barrel and are likely to stay high amid ongoing hostilities, prompting investors to sell long-term bonds,” UA&P added.
