Finance Secretary Go: PH Economy Can Weather the Middle East Storm — But Oil at $80 Could Push Inflation to 4%

Finance Secretary Frederick Go says the Philippine economy can absorb the impact of the Middle East conflict, predicting the effects will be 'temporary and not significant.' But local economists are more cautious, warning that sustained oil price increases could push consumer prices closer to the upper end of the BSP's 2-4% target.

Chinabank chief economist Domini Velasquez said if oil rises to around $80 per barrel, it could add roughly 0.2 percentage points to average inflation this year. Her baseline still places inflation at 3.6% for 2026, but warned: 'If tensions persist and oil prices remain elevated, inflation could drift closer to four percent.'

SM Investments group economist Robert Dan Roces put it bluntly: 'For the Philippines, the Middle East story is less about politics and more about oil. If oil stays elevated and the dollar strengthens, inflation and the peso feel it. If tensions de-escalate quickly, the impact fades just as fast.'

The peso could face pressure too. Global markets typically respond to Middle East conflicts with higher risk aversion that supports the dollar and pressures emerging-market currencies. But Velasquez noted that recent peso gains 'provide some buffer against imported inflation pressures.'

The situation remains fluid. Crude prices were already heading toward $67 per barrel — seven-month highs — before markets even opened after the weekend strikes. Analysts project prices could spike to $85-$90 if the conflict intensifies, and even beyond $100 if the Strait of Hormuz remains effectively blocked.

Source: Philstar