FPI, PCCI, Philexport Sound the Alarm: Middle East War Could Trigger Inflation Surge and Crush MSMEs

The Philippines' biggest business groups are raising the red flag: the escalating Middle East conflict isn't just a faraway war — it's a direct threat to Filipino wallets. The Federation of Philippine Industries (FPI), the Philippine Chamber of Commerce and Industry (PCCI), and the Philippine Exporters Confederation (Philexport) all issued warnings on Monday about the economic fallout.

FPI chairperson Elizabeth Lee said the Philippines, as a net oil importer, will inevitably feel the pain of higher global crude prices. 'The Middle East crisis is not just a distant conflict — it is an inflationary shock that could affect Philippine households and industries if tensions persist,' she said, noting that existing oil inventories are only a short-term buffer.

PCCI warned that higher fuel prices, disrupted supply chains, and reduced remittance inflows from OFWs in the Middle East will have a compounding effect that could accelerate inflation. MSMEs — with limited financial buffers — are expected to bear the brunt. Personal remittances hit a record ₱2.2 trillion in 2024, and any disruption to Middle East employment could weaken that lifeline.

Philexport flagged concerns for Philippine exports to the region, which remains an important market for Filipino food products, construction materials, and services. Shipping disruptions near the Strait of Hormuz could further delay deliveries and raise costs.

The warnings come as Iran has effectively shut down normal shipping through the Strait of Hormuz, through which roughly 20% of the world's oil flows. With oil prices already spiking, businesses are bracing for what could be a prolonged period of economic turbulence.

Source: Manila Bulletin