By Kenneth Christiane L. Basilio, A reporter
Iran war may reduce 0.2-0.3% from the worst houses in the Philippinestic product growth (GDP) this year, as the oil shock may reduce inflation to more than 4% this year, the Ministry. Economic, Planning, and DevelopmentSecretary (DEPDev) Arhe is old M. Balisacan said on Tuesday,
At the same time, the House Ways and Means Committee passed a resolution authorizing President Ferdinand R. Marcos, Jr. to suspend excise duties on fuel products, developing a proposal aimed at reducing the impact of volatile oil prices on consumers.
“The suspension of customs duties … can reduce the increase in oil prices and the increase in the price of oil around the world,” Mr. Balisacan told lawmakers at the congressional hearing. “Oil prices affect almost all goods and services produced in this economy, so the effect is huge.”
He said the increase in pump prices would increase inflation, destroy the purchasing power of Filipinos and the economy’s balance sheet.
As an oil exporter, the Philippines is very sensitive to sharp fluctuations in world oil prices.
Although fuel sellers have agreed to exchange large amounts this week, rising prices are at risk of reviving the currency’s strength.
According to its first scenario presented to the House Energy Committee, DEPDev predicts that inflation could accelerate to 4.5-5.1% this month, and 4.5-4.8% in April, when inflation for the whole year is seen to decrease to 4-4.2%, above the band targeted by the central bank.
In a worst-case scenario where oil prices reach $140 this month and stay above $80 until September, DEPDev said inflation could rise to 6.3-7.5% in March and 6.4-7.5% in April, bringing the full-year print to 4.5-4.8%.
Inflation could remain at 3.5-3.6% in 2027 under its baseline, and at 3.6-3.7% below the second scenario, according to the DEPDev presentation.
“With this kind of inflation, if you don’t do anything, it will hit consumers hard and reduce housing consumption, disrupting our economy,” said Mr. Balisacan.
Unchecked inflation could push the country’s full-year growth “back below 5%,” he said, adding that the Development Budget Coordinating Committee still sees growth in 2026 at 5-6% and 5.5-6.5% in 2027.
“We are evaluating the situation when the new number comes in May. But with the impact we see, that could put us back below 5%,” he said.
Philippine GDP growth slowed to 4.4% in 2025, the slowest in five years, as the flood control scandal weighed on government spending, investment and consumer spending.
DETERMINATION OF EXCISE TAX
Mr. Balisacan said the economic impact of the constant increase in gas prices can be mitigated by suspending excise duty, which will help ease the burden on consumers.
“The temporary suspension of excise duty collection can restore part of the purchasing power,” he said.
The House Ways and Means Committee on Tuesday approved an unnumbered consolidated bill that would give the President special powers to suspend or lower the gasoline tax during national and international emergencies for a period not to exceed six months.
Any suspension or reduction of the fuel excise tax rate may be extended beyond six months by joint congressional resolution.
Any extension cannot last for more than a year, according to Ways and Means Committee Chairman and Marikina Rep. Romero “Miro” S. Quimbo.
He said the bill also requires the President to send to Congress a report supporting his decision to cut taxes, including estimates of income and the impact of inflation, fuel prices and economic activity.
“We rely on the international market. Whatever happens there, we have no power,” Mr. Quimbo told the media. “The thing we can use to lower fuel prices is to remove the excise tax.”
Measures to freeze the collection of gasoline taxes have gained momentum in Congress after a series of gasoline price hikes that could raise prices for consumers.
The Philippine Chamber of Commerce and Industry (PCCI) said it supports efforts to empower Mr. Marcos “to implement measures that will take and stabilize prices” amid the fuel hike.
“Our request to the government is to temporarily hold back the increase in fuel prices,” PCCI President Perry A. Ferrer said in a statement. “We hope that the President will be given the authority to use and implement other measures that will help avoid the possible shock this week or next week.”
A 2017 law previously allowed the government to suspend the collection of excise duties on petroleum products when global oil prices reached $80 per barrel for three consecutive months, but the provision expired six years ago.
Mr. Balisacan said the loss of revenue from the suspension of the fuel excise tax could reach P43.3 billion if the suspension lasts for three months, and P106 billion if it is extended until September.
“If you stop the excise tax, that will mean less revenue collection for the government. That will affect our projects and programs and mean less resources,” he said.
Statistics from the Ministry of Finance revealed that suspending the collection of excise duty could lead to R136 billion in anticipated revenue, which the Ministry says could increase the government’s deficit and increase the country’s debt.
“Although the revenue effects are very small, the overall impact on the economy of doing nothing is very bad,” said Mr. Balisacan.
Temporarily suspending the collection of excise duty on fuel products may lead to cheaper fuel and moderate inflation, he added.
According to DEPDev, suspending the tax rate from March to May could help inflation reach 3.6-4.2% in March and 3.6-3.9% in April. This could bring annual inflation to 3.9-4.1% by the end of 2026, under the baseline scenario.
On the other hand, if world prices remain high and the tax rate is suspended from March to September, inflation may reach 5.4-6.6% in March and 5.5-6.5% in April, with inflation for the whole year at 4.-4.3%.
By 2027, DEPDev sees inflation falling to 3.5-3.6% under the baseline scenario, and 3.6-3.7% under worst case scenario.
WORK COMPATIBILITY?
Mr. Balisacan said the remittances of overseas Filipino workers (OFWs) could also be affected if the government decides to ban remittances to the Middle East.
The local economy could lose between P226.6 billion and P232 billion if about 550,000 Filipinos are repatriated, he said.
“If you consider a total ban … this reduction represents about 65% of remittances from the region,” he said. “It has a big impact on our OFWs… and the economy.”
There are approximately 2.41 million Filipinos in the Middle East. More than 975,000 work in the United Arab Emirates, with the rest in Saudi Arabia (813,000), Qatar (250,000), and Kuwait (211,000). There are approximately 800 Filipinos in Iran and 31,000 in Israel, according to the Ministry of Foreign Affairs.
