<\/p>\n
PHILIPPINE economic growth <\/span>c<\/span>ould slow to as little as 4% this 12 months <\/span>if the Middle East war escalates <\/span>further as higher pump prices and second-round inflation pressures <\/span>will weigh on consumption, Fitch <\/span>Solutions unit BMI said.<\/span><\/p>\n \u201cIn our escalatory scenarios, we see further scope for downward growth. Under our level three scenario, we expect growth to slow to around 4%, down from 4.4% in 2025, which is able to mark the weakest upturn since 2011, excluding the pandemic period,\u201d BMI Asia Country Risk Analyst Brandon Ong said in a webinar on Tuesday.<\/span><\/p>\n This forecast is well below the federal government\u2019s 5%-6% goal.<\/span><\/p>\n BMI\u2019s worst-case escalation scenario sees the conflict lasting for greater than three months after April, with Brent crude hitting $150 per barrel.<\/p>\n \u201cWe currently expect oil prices to fall relatively quickly once the conflict winds down, however the risks are tilted towards prices remaining higher for longer depending on the extent of infrastructure damage before the situation settles,\u201d BMI Head of Asia Country Risk Darren Tay said.<\/span><\/p>\n BMI said in a note dated April 20 that faster inflation as a consequence of higher oil prices will erode household purchasing power and weigh on domestic consumption within the Philippines.<\/span><\/p>\n \u201cAs such, we hold a cautious but positive outlook for consumer spending within the Philippines, with a slowdown in real household spending growth from 4.7% in 2025 to 4.5% 12 months on 12 months in 2026. In real terms, we expect household spending to grow to P14.1 trillion (at 2010 prices) over 2026, 26.2% <\/span>higher than 2019 levels,\u201d it said.<\/span><\/p>\n \u201cSpending will remain influenced by the elevated inflationary pressures in addition to currently high debt levels, together with related debt servicing costs, although a good labor market will still support spending.\u201d<\/p>\n Despite growing inflation risks, it expects the Bangko Sentral ng Pilipinas\u2019 (BSP) Monetary Board to face pat at its meeting this week. \u201cThe March 2026 inflation print got here in at 4.1%, breaching the BSP\u2019s 2-4% inflation goal range for the primary time since July 2024. That said, given the weak growth backdrop, we predict the bank will opt to look past temporary supply-driven price surges and adopt a wait-and-see approach.\u201d<\/p>\n \u201cFurthermore, our current projections show inflation returning to the goal range within the second half. Monetary policy can also be less well-positioned to tackle supply-side price shocks,\u201d Mr. Ong added.<\/p>\n He said that while they expect a pause this week, they see a rate hike in June or in an off-cycle meeting.<\/p>\n This comes as BMI sees headline inflation breaching 4% throughout this quarter, with second-round effects further fueling price increases.<\/p>\n \u201cUnlike in Thailand and a number of other other countries in Asia, the [Philippine] government doesn’t typically absorb higher energy costs, so rises in global energy prices go through relatively quickly. We’re already seeing this in the info,\u201d Mr. Ong said.<\/span><\/p>\n As of April 13, diesel and gasoline prices have increased by 172% and 72.6%, respectively, from pre-conflict levels, that are among the many sharpest increases in Asia, he noted.<\/p>\n Meanwhile, the peso could weaken to as little as the P65-per-dollar level if oil prices stay higher for longer as a consequence of a protracted war as this might affect the country\u2019s current account balance and investor sentiment.<\/p>\n \u201cEven so, in our base case, we still expect the peso to strengthen because the conflict de-escalates and for the peso to trade around P59.50 per US dollar by end-2026,\u201d Mr. Ong said. \u2014 A.M.C. Sy<\/b><\/span><\/p>\n<\/p><\/div>\n <\/p>\n","protected":false},"excerpt":{"rendered":" AN IRANIAN FLAG, a US dollar banknote and miniatures of oil pipes and barrels are seen on this illustration taken on June 23, 2025. \u2014 REUTERS\/DADO RUVIC\/ILLUSTRATION PHILIPPINE economic growth could slow to as little as 4% this 12 months if the Middle East war escalates further as higher pump prices and second-round inflation pressures […]<\/p>\n","protected":false},"author":1,"featured_media":322667,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[21651,28240,3431,1613,2667,3856,5106],"class_list":["post-322666","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-bmi","tag-consumption","tag-growth","tag-hits","tag-oil","tag-shock","tag-slow"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/posts\/322666","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/comments?post=322666"}],"version-history":[{"count":2,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/posts\/322666\/revisions"}],"predecessor-version":[{"id":322669,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/posts\/322666\/revisions\/322669"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/media\/322667"}],"wp:attachment":[{"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/media?parent=322666"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/categories?post=322666"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/tags?post=322666"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}