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MANILA, Philippines — The Middle East conflict could set back human development in the Philippines, with poor households facing the heaviest burden from higher fuel, food and fertilizer costs, the United Nations Development Programme warned.
In a policy brief released June 10, the UNDP said the Philippines is "among the more exposed economies in Asia and the Pacific, and among the harder hit" because it depends heavily on Middle East crude oil, imports food and fertilizer, and receives close to a fifth of overseas remittances from the region.
"The shock has reached households through three reinforcing channels: energy imports, agricultural inputs, and labour migration and remittances," the report said.
UNDP said the crisis could set back the country’s human development progress, warning that losses could grow the longer disruptions persist.
The UN agency's concern is not only the immediate rise in prices, but the possibility that temporary shocks could force poor households to reduce food, delay medical care or pull children from school.
It said the goal of the government response should be "preventing a temporary price shock from becoming a permanent human development setback."
"If relief is delayed or poorly targeted, coping responses such as reduced meals, forgone health care and interrupted schooling can convert the crisis into lasting human development losses in capabilities," the report said.
Poor households hit 5 times harder by fuel shock
The burden is falling hardest on poor households, as "the shock is also highly regressive," the report said.
Citing an earlier microsimulation analysis by the Philippine Institute for Development Studies, UNDP said poor households could lose around 16.2% of their real purchasing power from the oil-price shock, compared with 3.4% for the richest households.
"Poor households are losing close to five times as much real purchasing power as the richest," the report said.
The same PIDS analysis found that the shock could push between 1.3 million and 3.5 million additional Filipinos into poverty, depending on how long the disruption persists and how strongly global oil prices pass through to domestic prices.
UNDP also cited a World Bank estimate that recent fuel disruptions could push nearly 2 million Filipinos into poverty.
The warning comes after poverty fell to 15.5% in 2023, the lowest on record. But UNDP said the country’s progress "rests on thin margins," with nearly three in 10 Filipinos still vulnerable to falling back into poverty.
Inflation has already shown how quickly the external shock can reach households. Headline inflation rose from 2.4% in February 2026 to 7.2% in April, driven largely by transport and food prices. It eased to 6.8% in May, but the report warned that underlying pressures remained, with rice inflation rising to 15.6%.
"The breadth of the earlier increase, across fuel, food and utilities, is what made the shock so consequential for household budgets," the report said.
UNDP said food security could also be affected through higher fuel and freight costs, as well as higher fertilizer prices that raise production costs for farmers. Granular urea, the key fertilizer grade for rice and corn, rose by around 37% from the pre-crisis average in January and February to the post-crisis average in March and April.
The report said regions with weaker development baselines and limited fiscal capacity, including BARMM, Bicol, MIMAROPA, the Visayas and parts of Mindanao, are among those most exposed.
UNDP urged the government to keep food and fuel prices stable, secure energy supplies, give targeted aid to poor households and support farmers, workers and small businesses.
While the Marcos administration has several of these measures in place, the UN agency suggests that the challenge is to sustain and better target aid. — Camille Diola
