Prolonged Middle East crisis to drag Philippine growth to 3.8 percent – DLSU

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April 13, 2026 | 12:00am

MANILA, Philippines — The Philippine economy is likely to post below four percent growth this year if the Middle East conflict lasts for a longer period, according to the De La Salle University (DLSU).

In its report on the Philippine economy, DLSU said that it is keeping its gross domestic product (GDP) growth forecast of 4.19 percent for this year, citing the high uncertainty from the war involving the United States, Israel and Iran.

However, if the war continues for a prolonged period of time and brings global political and economic uncertainty and its succeeding effects on oil supply and prices, DLSU said its model indicates that 2026 growth could drop to 3.79 percent.

This scenario includes the lingering effects of the flood control corruption scandal.

Both forecasts are below the 4.4 percent growth in 2025 and the government’s five to six percent growth target for this year.

“We insist that if the war continues, the Philippine economy (already beset by corruption-induced pessimism and weak capital formation) will remain sluggish-even with Iran guaranteeing safe passage for Philippine vessels along the Strait of Hormuz,” DLSU said.

However, DLSU expects medium-term growth to improve slightly in 2027 and 2028.

“We forecast growth to hit 4.23 percent in 2027 and 4.17 percent in 2028. Both figures remain substantially below the government’s growth targets,” DLSU said.

The government has set a 5.5 to 6.5 percent growth target for 2027 and six to seven percent for 2028.

After inflation rose to 4.1 percent in March and breached the government’s two to four percent target, DLSU said it expects inflation to hover near or above the upper bound of the target through the end of the year.

“The possibility of a rate increase is high. Yet, our bet is that there will be no additional easing in 2026,” DLSU said.

At its surprise off-cycle meeting last month, the Bangko Sentral ng Pilipinas kept the key policy rates at 4.25 percent.