Philippines faces economic risks as Asean chair amid converging crises
At a time when various crises are converging, the Philippines is at the helm of the Asean chairmanship, facing significant structural vulnerabilities. The nation's economy is particularly sensitive to fluctuations in oil prices due to disruptions in Hormuz; according to MUFG Research Portal, a US$10 rise in oil costs can reduce Philippine growth by 0.2 percentage points and increase inflation by 0.6 percentage points. With Brent crude surpassing US$115, remittances from Filipino workers in the Persian Gulf serve as a crucial economic support. However, Capital Economics cautions that an extended regional conflict could lead to a 30-35 percent decline in remittances from the Middle East, jeopardizing this vital financial resource. The effectiveness of Manila's leadership will hinge on enhancing Asean's operational capacity.
Key facts
- Philippines holds Asean chairmanship amid multiple converging crises.
- MUFG Research Portal estimates every US$10 oil increase cuts Philippine growth by 0.2 percentage points and adds 0.6 percentage points to inflation.
- Brent crude spiked past US$115.
- Remittances from Philippine workers across the Persian Gulf are a pillar of the economy.
- Capital Economics warns a prolonged regional conflict could cut Middle East remittances by 30-35 per cent.
- Manila's success depends on making Asean more operational.
Entities
Institutions
- Association of Southeast Asian Nations (Asean)
- MUFG Research Portal
- Capital Economics
Locations
- Philippines
- Persian Gulf
- Middle East
- Hormuz