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The Asian Development Bank trimmed its growth forecast for the Philippines due to the wide-ranging impact of the Middle East conflict, slashing it to 4.4% this year from 5.3%
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Apart from the ripple effects of higher oil prices on consumer goods, PH could be affected in terms of remittances
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Money sent by overseas Filipino workers in the Middle East, mostly from Saudi Arabia and the United Arab Emirates, account for about 17% of total remittances
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PH inflation seen to hit 4.4% this year after easing to 1.7% in 2025
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ADB noted that the April outlook assumes a “short-lived” Middle East conflict
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A prolonged crisis “poses substantial downward risks”
The Asian Development Bank (ADB) trimmed its growth forecast for the Philippines due to the wide-ranging impact of the Middle East conflict, slashing it to 4.4% this year from the projected 5.3% in end-2025.
In its April 2026 Outlook for Asia and the Pacific, ADB said the developing economies of the region will be affected by higher energy prices, which will increase production costs and, ultimately, consumer prices.
“A prolonged conflict in the Middle East is the single biggest risk to the region’s outlook, as it could lead to persistently high energy and food prices and tighter financial conditions,” Albert Park, ADB chief economist, said in a news release.
“With renewed trade policy uncertainty posing additional risks, it is essential that governments implement sound macroeconomic policies to sustain growth and contain inflation, with targeted support measures to protect vulnerable households,” Park said.
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Inflation is seen to spike across most countries, including the Philippines at possibly 4% this year after easing to 1.7% in 2025 from 3.2% in 2024.
Remittances
Apart from the oil supply disruption, the Philippines is also affected in terms of remittances from overseas Filipino workers, which accounts for over 7% of gross domestic product (GDP).
“The Philippines is highly exposed given its heavy reliance on imported crude oil and refined oil products. Other transmission channels include possible disruption in remittances from overseas Filipinos, tighter financial conditions, and weaker investor and consumer sentiment,” the multilateral development bank said.
It added that “a prolonged conflict in the Middle East pose downside risks given the region’s 17.1% remittance share, largely from Saudi Arabia and the United Arab Emirates.”
Government data show remittances hit $35.6 billion in 2025.
Recovery in 2027
By 2027, GDP growth could recover to 5.5% while inflation may slow down to 3.5%.
Growth will still be driven by domestic demand, but purchasing power and spending could be eroded.
ADB cited government interventions to address the oil price hike, including the declaration of a national emergency, cash assistance for the transport sector, and energy supply management.
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Business sentiment remains cautious but there are bright spots for investments given recent structural reforms such as the easing of foreign share restrictions, improved public-private partnership regulatory policies, and improvements in budgetary release for infrastructure projects.
The ADB noted that the April outlook assumes a “short-lived” Middle East conflict, and that a prolonged crisis “poses substantial downward risks.”
For the long-term, ADB said “systemic challenges” on education, malnutrition, and youth unemployment must be addressed to improve human capital and achieve significant inclusive growth.
