Photo courtesy of Joan Bondoc/ Philippine News Agency (PNA)
With a peace deal between Iran and the United States now in the offing, the Philippines is expected to be one of Asia’s biggest beneficiaries with lower global oil prices expected to help tame inflation and provide a modest boost to the country’s economic growth.
According to Nomura Global Market Research (NGMR), “the US-Iran peace deal will be positive for Asia’s net energy importing economies through lower inflation and Thailand, Philippines, India and South Korea stand to gain the most.”
Based on latest monitoring, Brent crude prices have fallen sharply in anticipation of the agreement, sliding to below US$83 per barrel and standing about 25 percent lower than the previous month.
NGMR noted that the decline followed reports that Washington and Tehran had already agreed on the framework of an interim peace deal after more than three months of conflict and disruptions of oil supplies in the Strait of Hormuz.
Nomura said the peace deal, if sustained, could mark a turning point for Asia’s energy-importing economies, which have borne the brunt of higher oil prices through elevated inflation, weaker currencies and mounting fiscal pressures.
“For the Philippines, every 10-percent decline in oil prices could lower consumer price inflation by around 0.5 percentage point, improving the current account balance by 0.37 percentage point of gross domestic product.
and lift economic growth by approximately 0.07 percentage point,” the market research firm estimated.
However, it still projected Philippine growth to remain subdued at 4.6 percent this year, below the Marcos Jr. administration’s 5.0- to 6.- percent target.
Inflation, meanwhile, is expected to remain above the 2.0 to 4.0 percent target at 5.5 percent.
“We expect the impact of lower oil prices to be most visible in the Philippines, which has market-determined fuel prices,” Nomura projected while adding that “lower oil and fertilizer prices can also help keep the lid on food inflation, although with 2026 an El Niño year, medium-term risks to food inflation remain.
