PSA Intelligence Reports

Economic Brief - March 2026

Energy shocks caused by the Middle East conflict pushed Philippine inflation to 4.1 percent and interest rates to 4.5 percent. Reduced purchasing power, supply chain disruptions, and threatened overseas Filipino worker remittances compound these inflation risks, downgrading economic forecasts.

GDP Inflation State of the Economy Trade Foreign Investments
Economic Brief - March 2026
The impact of the ongoing Middle East conflict will likely parallel the economic effects of the 2022 Russia-Ukraine war, according to PSA Intelligence.

Executive Summary

Philippine Economic Situation 

  • Conflict-driven energy supply shocks raised commodity prices, pushing March 2026 inflation to 4.1 percent, the highest rate since July 2024. This is seen to impact the level of domestic consumption, which makes up a significant percentage (~70 percent) of the country’s economic output. 
  • The Bangko Sentral ng Pilipinas (BSP) raised interest rates to 4.5 percent to manage inflation, parallel to the economic aftermath of the Russian-Ukraine War in March 2022. This move will make loans and borrowing more expensive, likely making business expansion moves difficult. 
  • The ongoing Middle East conflict threatens to significantly reduce overseas Filipino workers (OFW) remittances via repatriations, while also causing major supply chain disruptions and lowering investor confidence for the country.

Industry Assessment

  • Anticipated lower customer demand and the high cost of manufacturing inputs contributed to the slowdown of manufacturing production in March 2026. 
  • Sales of electric vehicles saw an increase by 36.2 percent in the first quarter of the year, while fuel-powered vehicles recorded a 10 percent drop in sales during the same period. 

Outlook

  • PSA Intelligence anticipates that the inflationary effect of the conflict will likely continue throughout the year, regardless of the status of the conflict. Elevated oil prices will also contribute to high inflation. 
  • Philippine economic growth momentum for this year will likely be subdued. Major multilateral institutions have significantly downgraded the Philippines’ growth forecasts, citing the country’s vulnerability to energy shocks.
  • Nonetheless, PSA Intelligence foresees that renewable energy and electric vehicle-related industries may continue to benefit from an increased consumer demand in fuel alternatives.

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