Philippine economy warned: ‘Out of gasoline’ as oil shock deepens risks

The Philippine economy is facing its most severe test from the ongoing oil crisis, with economists warning that surging fuel costs and supply disruptions are exposing deep structural vulnerabilities and could derail growth prospects this year. In separate reports released on Friday, April 10, economists from De La Salle University (DLSU) and London-based think tank Capital Economics painted a stark picture of an economy highly sensitive to energy shocks, with limited buffers to cushion the impact on consumers and businesses. In their report, DLSU economists Jesus Felipe, Mariel Monica Sauler, Gerome Vedeja, and Seth Paolo Paden, together with DLSU political science assistant professor Susan Kurdli and University of the Philippines Los Baños (UPLB) assistant professor Juan Alberto Mercado, described the country’s growth engine as losing momentum. “In our view, the Philippine economy has ‘run out of gasoline’ to achieve the promised growth rates of 6.5 percent and above (adjusted downward several times),” they said, referring to the country’s economic potential. They maintained a 2026 gross domestic product (GDP) growth forecast of 4.2 percent, below the government’s downgraded five- to six-percent target, citing “very high uncertainty derived from the war on Iran,” adding that even if hostilities ease, growth is unlikely to rebound significantly. “Even in case the war ends soon (and we would have to see what this means in practice), Philippine growth would not be much higher than that attained in recent quarters and years during this administration,” the DLSU report said. The economists reiterated their long-standing view that the Philippine economy is structurally constrained. “We have argued since 2022 that the Philippine economy is not built to grow above six percent (its potential). The data have proven us correct,” they said. They warned that the combined effects of the energy shock and lingering fallout from last year’s corruption...