PHILIPPINE economic growth could accelerate this year despite pressures from war in the Middle East, the United Nations Economic and Social Commission for Asia and the Pacific (Escap) said.
In the 2026 edition of its Economic and Social Survey of Asia in the Pacific released on Tuesday, the UN body forecast growth of 5.2 percent for the country, up from the 4.4 percent recorded last year and within the government’s 5.0- to 6.0-percent target.
The pace is expected to pick up to 5.7 percent in 2027, also within the official goal of 5.5-6.5 percent.
Both outlooks, however, are lower than the 5.7 percent and 6.1 percent seen in January.
The Escap also qualified that its latest country projections were as of March 17 and had “factored in the immediate macroeconomic impacts of the conflict in the Middle East...”
“These baseline projections assume that de-escalation over the course of 2026 will help stabilize commodity prices and restore market sentiment to some extent,” it added.
“Yet the situation remains highly uncertain, and the eventual economic impacts will depend on the scale and duration of the conflict. Under the alternative scenario of prolonged conflict, economic growth could be notably lower than currently projected while inflation would be higher.”
Philippine inflation is expected to pick up to 2.5 percent this year and the next, within the 2.0- to 4.0-percent target, from 1.7 percent in 2025.
Under an extended war in the Middle East, the Escap said, “a surge in commodity prices and freight costs as well as supply chain disruptions will spike inflation and interest rates; weaker global demand will dampen merchandise exports, remittances and tourism; and subsequent job losses and plunging market sentiment will hurt consumer spending, business investment and economic growth.”
The forecasts for the Philippines are better than those for the region. The Escap said that “under considerable uncertainty,” developing Asia-Pacific economies were likely to grow by 4.0 percent this year, down from 4.6 percent in 2025.
Regional inflation, meanwhile, could rise to 4.6 percent from 3.5 percent.
“To manage inflation expectations, central banks in countries with relatively low inflation may postpone policy interest rate reductions, while those where inflation is already high may have to raise the rates,” the Escap said.
“Even when policy rates are unchanged, credit growth could slow as lending becomes more stringent,” it warned.
The Bangko Sentral ng Pilipinas (BSP) last month decided to keep the policy rate unchanged at 4.5 percent during an off-cycle meeting. Many analysts expect it to begin raising rates this Thursday in a bid to control inflation and boost economic growth.
Philippine inflation surged to 4.1 percent in March from just 2.4 percent in February and the BSP expects it to average 5.1 percent this year, breaching the 2.0- to 4.0-percent target.
The Escap joined other international organizations in lowering the growth forecasts for the Philippines due to the war in the Middle East. It was, however, more optimistic in that the outlooks remained within government targets.
The Asia Pacific will still be the fastest-growing developing region worldwide, the Escap said, but it added that “sustaining this performance will require a gradual shift from a primarily export-driven growth approach towards stronger domestic and regional sources of demand.”
“Key priorities in this vein include boosting productivity, expanding social protection, improving access to finance, and strengthening digital and physical connectivity across the region. Deeper regional cooperation will be critical to offset the effects of global economic fragmentation,” it added.
The war in the Middle East, which began on Feb. 28, could reignite if peace talks do not resume. A ceasefire is currently in place but will expire this week.
The UN commission said the conflict was pressuring Asia-Pacific economies already grappling with global economic uncertainties. Living costs are rising and low-skilled workers and low-income households are particularly vulnerable, it added.
“Policymakers are navigating rising global trade protectionism, economic policy uncertainty and geo-economic fragmentation,” UN Undersecretary-General and Escap Executive Secretary Armida Salsiah Alisjahbana said in a statement.
“Their eventual impact would be disproportionate for countries with smaller room for policy support and for people having limited access to social protection.”
The energy crisis has also highlighted the need to strengthen energy resilience, particularly via the adoption of renewable energy, the Escap said.
“This is especially critical today, as we witness in real time the effects of a dependence on fossil fuels, where every conflict risks sending shockwaves through the global economy,” UN Secretary-General António Guterres said.
