The IMF says the Philippines faces a ‘difficult situation’ as energy shocks in the Mideast dampen growth
By Katherine K. Chan, A reporter
WASHINGTON, DC – Philippine faces the diffreligious situation as over-reliance on oil exports tests economic stability amid the ongoing energy crisis stemming from the Middle East war, International The IMF said.
In a press conference during the Spring Meetings of the IMF-World Bank on Wednesday, IMF Managing Director Kristalina Georgieva said the impact of the war on the member economies of the Association of Southeast Asian Nations (ASEAN) is not equal, as energy importers in other countries like the Philippines eat copper.
“For foreign energy consumers, those who do not have a small amount of oil and gas, the situation is very different.fMrs. Georgieva said: “And I feel very sorry for the people of the Philippines because I know that your country is going through that. difficulty.”
In its latest World Economic Outlook (WEO), the IMF lowered its 2026 gross domestic product (GDP) growth forecast for the Philippines to 4.1% from 5.6% in January, reflecting weaker-than-expected growth in 2025 and the impact of war in the Middle East.
The IMF also expects 4.1% growth for the ASEAN-5 region, made up of Indonesia, Malaysia, the Philippines, Singapore and Thailand, this year. It was slightly lower than its average of 4.2% in January.
Ms. Georgieva noted that the region is “in a bright spot in terms of growth and economic stability” but still needs to strengthen regional integration to ameliorate climate shocks since the war.
“In fact, ASEAN is a bright spot in terms of growth and economic potential,” he said. “If you look at the impact of these shocks, because of this strong formation over the years, ASEAN is actually dealing with shocks as a group of countries relatively well.”
ASEAN’s smaller energy exporters may be in a better position to deal with the shock, unlike the larger impact experienced by energy exporters in the region, an IMF official said.
In the Philippines, oil prices have risen since the United States and Israel attacked Iran in Feb. 28. This week began the reversal of pump prices, as global oil prices fell amid a temporary freeze in the Middle East.
The Philippines is currently under a state of national emergency, President Ferdinand R. Marcos, Jr. power supply as the war progresses.
STOP
In a separate blog post published on Thursday, the IMF said the Philippine central bank could take a pause to maintain an easy environment.
“In economies where inflation remains below target, such as Thailand and the Philippines, further rate cuts may be temporarily suspended to maintain room for further reductions,” IMF Asia and Pacific Deputy Director of the IMF’s Department Andrea Pescatori and Director Krishna Srinivasan said.
Philippine inflation rose to 4.1% in March, breaking a nearly two-year streak of falling below the Bangko Sentral ng Pilipinas’ (BSP) target of 2%-4%.
Prior to this, the BSP kept its rates unchanged at an unchanged meeting although it raised its full-year rate to 5.1% from 3.6%, as it noted that the risk factors that are holding back the economic recovery are strong.
This halted the central bank’s easing cycle, which began in August 2024, during which it brought a total of 225 basis points in reductions to bring the policy rate to 4.25%.
BSP Governor Eli M. Remolona, Jr. on Tuesday said BusinessWorld that the economic relief expected from the government’s ongoing financial reforms has opened up space for the tightening of monetary policy.
However, he noted that the central bank is still monitoring incoming data, especially inflation, to get a clear direction for the upcoming policy review on April 23.
DISTRICT SHOCK
Meanwhile, Asia’s resilience against last year’s US tax policies and global trade uncertainty will be shaken as conflicts in the Middle East raise inflation, weaken external balances and limit policy options, Mr. Pescatori and Mr. Srinivasan on the IMF blog.
“Asia enters 2026 on a strong footing,” they said. “Despite the region burdened by US tariffs last April and trade policy uncertainty, growth strengthened in 2025 and trade remained strong.”
“Now, the war in the Middle East and the subsequent energy supply shocks are increasing inflation, weakening external balances, and reducing policy options, emphasizing regional dependence. oil and gas in other countries,” they added.
The multinational lender sees Asia growing at a slower pace of 4.4% this year and 4.2% next year from 5% in 2025.
“If shocks persist or intensify, as in the worst and severe WEO scenarios, growth in 2027 could be reduced by a combined 1% to 2%,” Mr. Pescatori. and Mr. Srinivasan added.
Inflation in the region is expected to accelerate to 2.6% annually, before slowing to 2.4% in 2027. However, this is very fast 1.4% clip recorded last year.
“The war has launched a new and swift storm clouding the near-term outlook for Asia, where oil and gas imports account for about 2.5% of economic output,” the blog read.
In the meantime, Ms. Georgieva said that this crisis requires strong regional integration among ASEAN countries as it faces shared economic problems.
“The Philippines is now leading ASEAN. I will be there when the meeting is held,” he said. “And I believe that this is very important for the regions that may trade more with the countries in the region.”
“Build that integration. You will benefit from it in a world that is often in shock,” Ms Georgieva added.
