The World Bank has trimmed its 2026 growth outlook for the Philippines to 3.7%, warning that the country is among the most vulnerable in the region to surging oil prices triggered by Middle East hostilities and compounded by U.S. tariff actions.
The lender also lowered its forecast for East Asia and the Pacific to 4.2% from 4.3%.
“The Philippines stands out as one of the economies in the region most acutely exposed to oil price shocks,” the World Bank said in its April East Asia & Pacific Economic Update. “Rising fuel costs are straining the transport sector and driving up logistics and commuting expenses for businesses and households alike.”
The report flagged risks from higher energy and fertilizer prices feeding into food costs and eroding household purchasing power. “The government’s declaration of an energy emergency underscores the severity of the situation. Growth is projected to remain below potential at 3.7%,” it said.
Regional growth is expected to slow to 4.2% in 2026 from 5% last year, as the energy shock compounds trade barriers, policy uncertainty and domestic challenges.
The bank cautioned that a sustained 50% jump in fuel prices could cut household incomes across the region by 3% to 4%.
“The region’s past resilience is remarkable, but present difficulties could increase economic distress and inhibit productivity growth,” said Aaditya Mattoo, World Bank Group Director of Research. “Measured support for people and firms could preserve jobs today and reviving stalled structural reforms could unleash growth tomorrow.”
