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We often hear and read how bad things can be for the Philippines and many other countries in the world as a result of the high oil-gas prices with the ongoing Iran war. While this is understandable, it also begs a look back of past economic performance as this is not the first or second time that the world has seen huge oil price shocks. There were many precedents already.
1970s-1990s
The first large oil price shock occurred in late 1973-1974, triggered by the Yom Kippur war in Israel and its aftermath. Dubai crude jumped from $2.8/barrel in 1973 to $10.4/barrel in 1974 or nearly four times price hike.
The second occurred in 1979 during the Iran civil war, oil price jumped from $13/barrel in 1978 to $29.8 in 1979, or more than double price hike. The third occurred in 2000 during the large Palestine intifada vs Israel, the price jumped from $16.9/barrel in 1999 to $26.3/barrel in 2000.
For brevity purposes, I will get the period averages for both Dubai crude prices and GDP growth in percent as follows: (a) 1972-1973 (b) 1974-1978 (c) 1979-1985 (d) 1986-1999.
Data sources: for crude oil prices, Energy Institute’s Statistical Review of World Energy 2025. GDP annual growth 1970s from WB’s World Development Indicators database; GDP annual growth 1980s onwards from IMF’s World Economic Outlook database; averages are my computations.
For Dubai crude prices in $/barrel: (a) 2.4 (b) 11.6 (c) 30.8 (d) 16.1. Rising oil prices in (b) and (c) then decline in (d).
The average GDP growth in percent of big East Asia 3 (EA-3) in periods (a) to (d) were as follows: China: 5.8, 5.7, 9.9, 9.8; Korea: 11.1, 10.8, 7.9, 8.4; Japan: 8.2, 3.1, 4.2, 2.5.
For the ASEAN-6: Singapore: 12.0, 6.4, 7.8, 7.6; Malaysia: 10.5, 7.0, 6.1, 7.0;
Indonesia: 7.6, 7.0, 6.1, 5.6; Thailand: 7.3, 7.8, 5.3, 6.7;
Philippines: 7.1, 5.7, 0.7, 3.5; Vietnam: no data for (a) and (b); 5.3, 6.6.
The high growth in China and Korea were hardly affected by high oil prices in (b) and (c) while Japan was affected in (b) and did not benefit from lower prices in (d).
Among the ASEAN-6, some growth decline in (b) and (c) but still at high levels except the Philippines in (c) where there was economic crisis from 1983-1985 in the previous Marcos Sr. administration.
The performance of rich countries in the West, same period, they really experienced lower growth in (b) and (c): US: 5.5, 3.0, 2.8, 3.4; Canada: 6.1, 3.6, 2.8, 2.6;
Germany: 4.5, 2.3, 1.6, 2.5; UK: 5.4, 1.1, 1.9, 2.7.
2000 to 2019
Continuing from the earlier periods, I divide the new periods into five: (e) 2000-2004 (f) 2005-2007 (g) 2008-2010 (h) 2011-2014 and (i) 2015-2019. I stopped in 2019 to exclude the 2020-2021 lockdown years where economic distortion was horrible.
Dubai crude prices in $ per barrel from (e) to (i) were: 26.6, 58.7, 77.7, 104.4, and 55.8. So from period (d) there was sustained increases to (e) up to (h) then stabilized at (i).
GDP performance of EA-3 in percent, China: 9.3, 12.8, 9.9, 8.1, 6.7;
Korea: 6.0, 5.1, 3.6, 3.2, 3.0; Japan: 1.4, 1.5, -0.9, 0.9, 0.8. China was hardly affected even by the $104/barrel oil. Korea was mildly affected while Japan was adversely affected with contraction and below 1.0 percent growth.
GDP performance of ASEAN-6, Vietnam: 7.2, 7.2, 5.8, 6.0, 7.1;
Indonesia: 4.6, 5.8, 6.2, 5.7, 5.0; Philippines: 4.6, 5.6, 4.4, 6.0, 6.6;
Malaysia: 5.4, 5.6, 3.6, 5.4, 4.9; Singapore: 5.3, 8.5, 5.5, 4.9, 3.2;
Thailand: 5.5, 4.9, 2.8, 2.9, 3.4. The ASEAN-6 economies were also hardly affected by high oil price shocks.
The industrial west’s GDP performance, US: 2.7, 2.8, 0.1, 2.1, 2.6;
Canada: 3.0, 2.6, 0.4, 2.5, 1.9; UK: 2.9, 2.6, -0.9, 1.9, 2.0;
Germany: 1.0, 2.5, -0.2, 1.7, 1.8. They have sustained low growth, even UK and Germany contraction in period (g) where the US finance and housing crisis happened.
From the above data, there is economic basis to argue that many East Asia and ASEAN countries in particular can weather the current high oil prices as the countries have achieved internal and regional economic dynamism and resilience.
The Philippines’ growth target of five to six percent this year appears to be attainable on the low side but the reason is more on the continuing corruption scandal and lower business confidence than the current oil price shock, which is affecting many countries worldwide.
Europe will experience double whammy, high energy prices from MidEast or imported LNG from the US, plus less access to cheap Russia oil-gas. Whereas China (and India) will benefit from more inflows of cheap Russia oil-gas, and China exports of so many manufactured goods like trucks, buses, cars, chips and consumer items will help improve East Asian productivity while keeping inflation low and manageable.
I see more migration of capital and companies from Europe to East Asia, including the Philippines. This will compensate for the economic hardship from higher global oil prices.
The Philippines as Chair of the ASEAN this year will have the great opportunity to advance a regional agenda of Peace and Prosperity. More trade and investments, more commerce and tourism in the region while the US and Europe are into endless wars and interventionist regime change projects.
President Marcos, Executive Secretary Ralph Recto and the rest of the Cabinet leadership have this great chance to pursue regional Peace and Prosperity. All war mongering agenda should be set aside, both Ukraine and Iran wars show how ugly and evil wars are.
