THE Philippines could face greater exposure to higher US interest rates and elevated oil prices as the artificial intelligence (AI) investment boom continues to shield much of Asia from external financial shocks, ANZ Research said.
In its latest Asia Macro Weekly report, ANZ said Asian financial markets had remained relatively resilient despite the US Federal Reserve raising its policy rate, US 10-year Treasury yields climbing to 5 percent, and global oil prices staying above $100 per barrel amid the conflict in the Middle East.
The resilience, however, has not been uniform across the region.
The Philippines, along with India and Indonesia, stands out as an exception because it is not a major beneficiary of the AI-driven export boom and also runs a current-account deficit, according to ANZ.
“The currencies of these three economies are also the worst-performing ones year to date, as high oil prices raised the import bill while higher US interest rates made it more challenging to attract portfolio inflows to fund external deficits,” ANZ research said.
The Philippine peso has traded above the P60:$1 level in recent months, with ANZ forecasting the currency to end the year at P63:$1 before gradually returning to the P60:$1 level by 2028.
ANZ said this could leave the Philippines more sensitive to shifts in global interest rates, oil prices, and investor sentiment at a time when other Asian economies are receiving a stronger boost from AI-related trade and investment.
It noted that Asian currencies had remained broadly resilient and had become less sensitive to changes in Federal Reserve expectations since mid-July, even as US Treasury yields rose and oil prices approached $110 per barrel.
The usual risk-off response to higher US yields and oil prices has also been relatively muted.
The research firm attributed much of this resilience to strong export performance, particularly from economies benefiting from the rapid expansion of AI-related investment.
“The exceptions are economies that are not major beneficiaries of the AI boom and run current account deficits — principally India, Indonesia, and the Philippines,” ANZ said.
It noted that China’s exports were up about 25 percent year-on-year in July, while South Korea recorded 68.7-percent growth.
The gains have been driven largely by demand for semiconductors, servers, advanced packaging, memory chips, and data-center equipment as technology companies around the world ramp up spending on AI infrastructure.
These type of exports has provided Asian economies with stronger external positions, ANZ said, helping offset some of the pressure from higher US interest rates and energy costs.
It argued that this provide a buffer against higher oil prices and US Treasury yields because economies with stronger external balances have greater capacity to absorb higher import costs and are less dependent on foreign portfolio inflows to finance external deficits.
The Philippines does not enjoy the same cushions.
For the Philippines, the issue is particularly important because higher global oil prices directly increase the country’s import bill.
At the same time, higher US interest rates can make dollar-denominated assets more attractive, potentially making it more difficult for emerging markets to attract portfolio capital.
ANZ cited that the country’s net exports contributed only 0.4 percentage point to first-half growth, making the economy rely more heavily on domestic demand.
Private consumption contributed 2.1 percentage points to growth while public consumption added 1.1 percentage points. Gross fixed capital formation, however, subtracted 2.1 percentage points.
The Philippines recorded 2.6-percent gross domestic product (GDP) growth in the first half of 2026, considerably below the growth rates posted by several of the region’s major AI beneficiaries. In the second quarter, Philippine GDP growth slowed down to 2.3 percent.
Taiwan grew 14.1 percent during the the first quarter, followed by India (8.2 percent), Singapore (6.1 percent), Malaysia (5.7 percent), Indonesia (5.4 percent), China (4.7 percent), and South Korea (3.8 percent). Thailand grew 2.4 percent.
While the Philippines may not experience the same magnitude of an AI-driven export windfall as Taiwan, South Korea, or other major technology exporters, ANZ said it could still be affected if the boom eventually loses momentum because slower regional trade growth would reduce the external demand supporting the broader Asian economy.
ANZ said global hyperscaler capital expenditure is expected to reach nearly $1 trillion in 2026, rising to around $1.35 trillion in 2027, and about $1.6 trillion in 2029 to 2030.
However, the growth rate of that spending is expected to slow sharply — from about 95 percent in 2026 to 39 percent in 2027, 13 percent in 2028, and 5 percent in 2029.
This means the AI investment cycle is expected to remain large even as its rate of expansion moderates.
“Given Asia’s exports are dependent on this capex (capital expenditure) spending, in terms of growth rates, we are likely to see a peak in exports this year with the growth rate slowing from next year onwards,” ANZ said.
“That means the net export contribution will decline from next year,” it added.
