Political Shifts, Middle East Tensions Pressure Philippine Economy
When business confidence drops, economic activity follows, according to an industry expert in the Philippines.
The ongoing political uncertainties in the Philippines do nothing to help the country cope with global economic headwinds, according to Ferdinand A. Ferrer, president of the Philippine Chamber of Commerce and Industry (PCCI).
Prolonged political uncertainty will “negatively affect” Philippine economic growth, he said in a May 21 interview.
Any lack of transparency and swift action on the impeachment process will also “rot” business confidence, he told The Business Manual.
“When confidence drops, economic activity drops.”
The country’s headline inflation rate rose to a three-year high of 7.2% in April 2026, up from 4.1% in March.
The Philippine peso likewise closed at P61.465:$1 on Monday, May 25, 2026. It broke past the P61 milestone for the first time on April 28, 2026, fueled by Middle East geopolitical risks and rising global commodity prices.
Ferrer called on the government to focus on “providing certainty and security with the business community.”
“If they project a feeling of not focusing on business or the country, then the confidence level of the business community drops, to say the least.”
He also noted that political developments are “top of mind” for Filipino businesses, including micro, small, and medium enterprises (MSMEs).
Large companies — estimated at around 5,000 in the Philippines — already have business continuity plans they can adapt to ongoing disruptions, he said. The MSME sector, which numbers around 1.2 million and makes up 99.6% of the entire Philippine business community, is a different story.
“They don’t have it [business continuity plans],” he said. “They are preoccupied with what is happening with our government, which is not a good indication, because they should be focused more on the survivability of their businesses and what the next steps are.”
Political Shifts, Middle East Tensions Pressure Philippine Economy
The business community has been increasingly concerned about the rising cost of importation and fuel since the beginning of the Middle East conflict, Ferrer also said.
Diesel prices in Metro Manila averaged P89.84 for the week of May 19, 2026, according to fuel price tracker GasWatch PH, while unleaded gasoline stood at P89.04 for the same period.
Although fuel prices have eased from earlier peak rates, Ferrer noted that importation costs remain high.
“They have not seen reductions in the cost of importing products because the logistic costs are still on the high side. They have reduced, but they’re still on the high side,” he told The Business Manual.
“That’s what the businesses are saying to us in the chamber: we need support. We need a lifeline.”
PCCI is assisting the business community, particularly the MSME sector, to alleviate economic pressures. In April, it partnered with the Department of Trade and Industry’s Small Business Corporation (SB Corp) to create a P7-billion loan facility program focused on MSME financial assistance.
Frequently Asked Questions
Prolonged political noise and procedural uncertainty, such as lack of transparency in an impeachment process, actively erode local business confidence. According to PCCI President Ferdinand A. Ferrer, when corporate and investor confidence drops, a direct drop in overall economic activity inevitably follows. The domestic business community shifts its focus away from productivity and toward analyzing government instability, which dampens the country’s economic growth potential and weakens its buffer against global disruptions.
The geopolitical crisis in the Middle East has triggered a rise in global commodity prices, sustaining high logistics and importation costs for local companies. Though fuel prices have slightly dipped from their absolute peak rates, the elevated cost of moving goods continues to strain business supply chains. This pressure manifests at local gas pumps, with Metro Manila fuel trackers showing average prices hovering near P89 per liter for both diesel and unleaded gasoline.
Unlike the estimated 5,000 large corporations in the Philippines that maintain sophisticated business continuity plans to weather macro disruptions, the micro, small, and medium enterprise (MSME) sector largely lacks these strategic safety nets. Comprising roughly 1.2 million establishments—or 99.6% of the entire local business community—MSMEs are preoccupied with tracking government issues rather than mapping out long-term corporate survival. This structural exposure leaves the majority of the domestic economy highly vulnerable to abrupt currency drops and inflationary spikes.
The domestic economy is facing a multi-front challenge characterized by a three-year high headline inflation rate of 7.2% alongside severe pressure on the local currency. Driven by global supply chain disruptions and geopolitical risks, the Philippine peso weakened past the significant milestone of P61 against the US dollar. These compounding factors increase the operational overhead for an import-dependent economy, requiring immediate stabilizing measures from financial institutions and state regulators.
To protect vulnerable entrepreneurs from deteriorating market conditions, the Philippine Chamber of Commerce and Industry partnered with the Department of Trade and Industry’s Small Business Corporation. This private-public collaboration established a targeted P7-billion loan facility program designed to provide quick financial assistance and liquidity to struggling MSMEs. The strategic goal of this fund is to offer a capital buffer, helping smaller enterprises cover high importation costs and stay afloat without accumulating destructive debt.
