The Federation of Philippine Industries (FPI) said that the current situation in the Middle East presents a strong message for the country to implement with urgency long-term resilience measures.
“All the more now, we need to accelerate energy diversification and reduce dependence on imported fuels. Expanding renewable energy — including solar, wind, and geothermal — strengthening energy efficiency, encouraging local sourcing, and accelerating infrastructure modernization will be critical to cushioning the economy from recurring external shocks,” said FPI Chairperson Elizabeth H. Lee.
As a net energy importer, the Philippines will feel the pass-through of higher global crude prices, affecting pump prices, electricity generation costs, and transport fares. Local oil firms’ existing inventories may help stagger price adjustments and cushion the immediate impact on consumers. However, this is only a short-term buffer.
“If the conflict escalates or becomes prolonged, inventories will be replenished at higher global prices — resulting in sustained upward pressure on domestic fuel costs,” Lee said.
Logistics and shipping will also be affected as geopolitical risks drive up premiums amid ongoing risks. “For manufacturers dependent on imported inputs, this may translate into higher freight costs, longer transit times, and more expensive raw materials,” she added.
Belt tightening
“Further, businesses will need to tighten belts and actively manage financial risks. Quick, low hanging reforms that ease the cost of doing business and reduce the ‘hidden taxes’ on local manufacturers and MSMEs can help cushion, at least in part, the impact of global pressures,” she added.
She noted that the Middle East crisis is not just a distant conflict, but an inflationary shock that could affect Philippine households and industries if tensions persist.
Currency volatility introduces another layer of risk.
Global investors often flock to the US dollar during geopolitical uncertainty, strengthening the dollar. A stronger US dollar may benefit exporters but compress margins for import-dependent industries, as a weaker peso raises the cost of imported inputs. Rising electricity and fuel costs will particularly affect sectors such as manufacturing, aviation, food processing, and tourism, which are highly exposed to energy shocks.
“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.
