PHILIPPINE economic growth could slump this year due to a protracted war in the Middle East, the World Bank said.
The forecast for this year was slashed to 3.7 percent from 5.3 percent, below the government’s 5.0- to 6.0-percent goal and also a marked slowdown from 2025’s below-target 4.4 percent.
“[The] Philippines is exposed to the conflict not only through energy and fertilizer imports but also through remittances,” World Bank East and Asia Pacific senior economist Ergys Islamaj told reporters in a briefing on Wednesday.
“[A] longer conflict will hurt the economy further,” he added.
Aaditya Mattoo, World Bank Development Research Group director, said the outlook was in line with expectations of a decline in the East Asia and Pacific region.
“It will happen in terms of the slowdown in China as well as the region excluding China. As you see, most countries in the region are going to see slower growth in 2026 than they have in 2025,” Mattoo said.
“The good news is we are likely to see a bounce-back in 2027, where many countries are going to see a rebound in the hope that many of the difficulties that have hurt growth this year will, if not entirely disappear, will diminish, whether it is the conflict in the Middle East or the whole climate of global uncertainty that has hung like a pall over development.”
The World Bank raised its Philippine growth forecast for 2027 to 5.6 percent from 5.4 percent.
Mattoo warned that remittances to countries like the Philippines — which rely heavily on money from abroad — could decline, particularly from the Gulf, where inflows account for about 1.5 percent of growth.
He added that higher oil prices would also hit the poor the hardest since they spend a larger share of their incomes on fuel.
Data from the Bangko Sentral ng Pilipinas showed that Filipinos working in the Middle East collectively sent over $6.4 billion in remittances to the Philippines last year.
“As to how much individual countries will be affected depends on how exposed they are in terms of their dependence on oil trade, how vulnerable they are in terms of existing inflation or current account deficits, and how much policy space they have in terms of both monetary and fiscal policy to respond,” Mattoo said.