The ongoing conflict in the Middle East poses more than a geopolitical concern — it is emerging as a potential economic shock for the Philippines, affecting households, industries, and the cost of doing business.

“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,” said Federation of Philippine Industries chairperson Elizabeth H. Lee.

Vulnerable to rising global crude prices

As a net energy importer, the Philippines is vulnerable to rising global crude prices, which can translate into higher pump prices, electricity rates, and transport fares.

While local oil firms’ existing inventories may temporarily soften the blow, Lee warned that “if the conflict escalates or becomes prolonged, inventories will be replenished at higher global prices — resulting in sustained upward pressure on domestic fuel costs.”

Logistics, shipping costs expected to rise

Logistics and shipping costs are also expected to rise. Manufacturers relying on imported raw materials may face longer transit times, higher freight charges, and more expensive inputs.

Currency fluctuations add another layer of uncertainty, as a stronger US dollar benefits exporters but increases costs for import-dependent sectors. Industries such as manufacturing, aviation, food processing, and tourism are particularly exposed.

‘The real risk: duration’

“The real risk is duration. Markets can typically absorb short geopolitical disruptions, but prolonged instability will translate into sustained pressure on inflation, logistics, and growth,” Lee said.

Lee emphasized the need for long-term resilience measures, including diversifying energy sources, expanding renewables like solar, wind, and geothermal, improving energy efficiency, and promoting local sourcing.

Infrastructure modernization and business reforms that reduce operational costs and “hidden taxes” for local manufacturers and MSMEs will also be critical to mitigate the impact of ongoing external shocks.

“Further, businesses will need to tighten belts and actively manage financial risks,” Lee added, underscoring the importance of proactive strategies to cushion the economy from sustained global pressures.