The Middle East conflict raises risks for the Philippine economy and the broader Asia-Pacific region through weaker remittance flows, according to the International Labour Organization (ILO).
In a report dated 18 May, the ILO said remittance-heavy economies such as the Philippines face elevated risks as mass repatriations and political instability stemming from the Middle East conflict threaten overseas Filipino worker (OFW) households.
“Between early March and late April 2026, close to 5,000 Filipino workers were repatriated from Gulf countries. Migrant worker outflows to the Gulf also fell sharply, from more than 72,000 in March 2025 to around 16,000 in March 2026,” the ILO said.
The organization said the effects are expected to be “highly uneven across regions, sectors and workers,” with the Asia and the Pacific region – of which the Philippines belongs to – as well as the Arab States identified as the most exposed due to their integration with Gulf energy flows, trade routes, supply chains and labour migration.
Cash remittances from OFWs reached $2.87 billion in March, rebounding by $85 million from February’s nine-month low and bringing total inflows for the first quarter to $8.68 billion, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP).
However, cash remittances grew by just 2.8 percent year on year in the January-to-March period, slightly slower than the 3.1-percent growth recorded during the same period last year.
On average, remittances account for around 9 percent of the Philippines’ gross domestic product, with the Middle East accounting for roughly 18 percent of total remittance inflows.
The ILO reported that OFW deployment to the Middle East contracted by 78 percent year on year following the conflict’s escalation in March, warning that prolonged disruptions to migration and overseas employment could place additional pressure on remittance flows moving forward.
“The conflict is expected to affect labour markets for some time, with the scale and duration of its effects depending on how the situation evolves,” the ILO said.
“While the full consequences will take time to materialize, the ILO warns that the shock is already transmitting through multiple channels, with pressures expected to build gradually in a global economy still marked by weak growth and decent work deficits,” it added.
The ILO also said the conflict’s spillover effects have constrained Filipino purchasing power through elevated inflation, which accelerated to 7.2 percent in April.
The organization warned that increasing pressure on household incomes and purchasing power “could weigh on domestic demand and local labour markets.”
Analysts have noted, however, that OFWs earning in dollars may also benefit from the peso’s sharp depreciation, with the local currency posting a fresh record low of P61.75 per US dollar on Monday, boosting the purchasing power of remittances sent home.
According to RCBC Chief Economist Michael Ricafort, OFWs may likewise be adjusting to the higher prices and broader uncertainty brought about by the Middle East conflict.
“OFW remittances remained resilient, similar to the pandemic period, as OFWs may need to send more to their families to better cope with higher prices, inflation, slower demand, and weaker economic and business conditions,” he said.
Ricafort added that the March remittance figure was “partly weighed by some OFWs adversely affected by the disruptions in the Middle East in terms of some reduction in OFW deployment.”
