Rescuers in the Philippine city of Angeles were still searching through the wreckage of a nine-story building that collapsed before dawn on May 24. Early official and local reports said dozens of construction workers may have been trapped under concrete slabs, while several people were rescued alive and no deaths had been confirmed in the first accounts.

Nine-story building collapses in Pampanga

The building, still under construction, collapsed in the Balibago district of Angeles City in Pampanga province, north of Manila. Bloomberg reported that at least 30 people were feared trapped, while local authorities and emergency responders cited estimates of 30 to 40 people based on information from a foreman who managed to escape the site.

GMA News said the incident took place before dawn on May 24, 2026, when the nine-story structure along Teodoro Street in Barangay Balibago suddenly gave way. Initial reports indicated that the property was an active construction site rather than an occupied building, making construction workers the main group at risk.

Rescue count changes as operation continues

Associated Press reported that 24 people either escaped or were rescued, while at least 21 remained missing in the first hours after the collapse. Police and city officials cautioned that the figures could change as rescuers continued to detect signs of life and verify how many workers had been inside the structure.

Philstar later reported that at least 26 people had been pulled from the rubble or rescued, underscoring how fast the casualty picture was shifting during the emergency response. In major construction accidents, early numbers often differ because worker lists, hospital transfers and field reports from police, firefighters and city disaster teams are reconciled only gradually.

Voices heard beneath unstable concrete

ABC Australia reported that two people trapped in the wreckage were alive and communicating with rescuers. That made the operation more delicate: heavy equipment could speed up debris removal, but it could also trigger further movement in the collapsed concrete and steel reinforcement.

Public Works and Highways Secretary Vince Dizon said at the site that the area remained highly unstable and that the priority was to get people out. Rescuers used sniffer dogs, manual search methods and life-detection equipment because the fallen structure posed a direct danger to the teams working on the debris.

Cause of the Angeles building collapse remains under review

The official cause of the collapse had not been established in the first reports. The building fell after a severe thunderstorm, but authorities did not identify the weather as the definitive cause. In accidents of this scale, investigators typically examine structural design, concrete quality, formwork, reinforcement installation, floor-pouring sequence, building permits and the presence of engineering supervision.

ABS-CBN described the structure as a planned nine-story hotel project in Balibago. The district sits in an urban area linked to hotels, entertainment and visitor traffic around Angeles and the former Clark air base, which was later converted into an economic and commercial zone.

Philippine building rules face renewed scrutiny

The National Building Code of the Philippines, known as Presidential Decree No. 1096, sets rules for building design, permits, inspections and safety. Its revised implementing rules were issued under the Department of Public Works and Highways, the agency responsible for national construction standards and regulatory guidance.

After the collapse, investigators are likely to focus on whether permits were secured, whether the approved design matched the actual work, whether inspections were conducted and who was responsible for engineering supervision. In fast-growing cities, such reviews matter not only for criminal accountability but also for investor confidence in the real estate market.

Angeles and Clark remain a major commercial corridor

Angeles is about 80 kilometers north of Manila and is closely linked to Clark, once one of the largest U.S. air bases outside the American mainland. After the base closed in the early 1990s, the area developed into a business, logistics, hotel and entertainment hub in northern Luzon.

That economic backdrop makes the accident sensitive for the construction and hospitality sectors. New projects in and around Angeles serve tourists, business travelers, Clark-based workers and domestic demand for commercial property. The collapse may increase scrutiny of projects, especially mid-rise hotels and apartment buildings under construction.

Formal investigation likely after rescue phase

Inquirer reported that the public works chief personally inspected the site of the collapsed reinforced-concrete building. That response suggests the incident has moved beyond a local emergency and may become the subject of an interagency review involving city officials, police, construction regulators and engineering specialists.

Authorities usually avoid final conclusions before the rescue phase is complete. The immediate priorities are to determine how many people were on site, recover survivors, provide medical treatment and stabilize the wreckage to prevent a secondary collapse.

As experts at International Investment report, the accident highlights a core risk in fast-growing urban real estate markets across Southeast Asia: project cost and construction speed are often visible markers of development, while supervision quality, engineering discipline and permit transparency remain less visible until a disaster occurs. For investors and property buyers in the region, the central lesson is to examine not only location and projected returns, but also developer history, permits, technical audits and contractor accountability.

The Philippine office market entered 2026 in stronger shape than several other real estate segments: vacancy in Metro Manila eased slightly, rents in major business districts stayed broadly stable, and leasing was supported by traditional companies, government agencies, shared-services firms and the information technology and business process management sector. Geopolitical risk and expensive energy are already making tenants more cautious, but they have not yet broken demand for quality offices.

The office market absorbed the external shock

The Manila Times reported that global geopolitical developments have not visibly dented the Philippine office property market, with transactions and vacancies remaining stable despite pressure from the Middle East conflict, energy costs and more cautious tenant behavior. That matters because offices have looked more resilient than housing, hotels and parts of consumer-driven real estate, which are more exposed to inflation, tourism and household confidence.

Stability does not mean a rapid rebound. Companies are leasing more carefully, choosing ready-to-use spaces, limiting capital expenditure and watching electricity, service-charge and commuting costs. But the market has passed the most difficult stage after the exit of offshore gaming operators and the post-pandemic reassessment of office strategies.

Metro Manila vacancy edged lower

Colliers said Metro Manila office vacancy eased to 19.0% in the first quarter of 2026 from the previous quarter. The firm attributed the improvement to stable leasing activity, fewer space surrenders and the absence of new office completions during the period. Rents remained broadly stable across major central business districts, while Grade A and Premium buildings in Makati CBD posted slight rental upside because of limited availability of high-quality space.

The data show that the market is being supported not only by demand, but also by a temporary limit on new supply. If new buildings arrive before tenants accelerate expansion, vacancy could rise again. That makes the current stability conditional on construction timing, tenant retention and the conversion of leasing inquiries into signed deals.

Traditional occupiers led transactions

CBRE estimated Philippine office transactions at 178,300 square meters in the first quarter of 2026, up 8% quarter on quarter but still 19% below the previous year’s level. Demand at the start of the year was led largely by traditional companies, though average transaction size declined; deal volume rose to 179 transactions, while average deal size fell to 1,040 square meters. CBRE put Metro Manila vacancy at 19.5%, helped by the lack of major new completions and limited newly vacated space.

Traditional occupiers usually include non-IT-BPM tenants such as legal, engineering, construction, financial, government, professional-services and local corporate users. Their role has grown because some international outsourcing companies are becoming more selective, while employers increasingly prefer flexible formats and smaller spaces over large long-term commitments.

Leechiu sees net demand rising

Leechiu Property Consultants said office net absorption rose 77% year on year to 133,000 square meters in the first quarter. Gross demand reached 234,000 square meters, down 22% from the previous quarter, consistent with normal first-quarter seasonality. Traditional occupiers accounted for 143,000 square meters, or 61% of total demand, while information technology and business process management firms contributed 79,000 square meters, or 34%.

Net absorption measures how much occupied office space increased after subtracting space that was vacated. It is more important than gross demand because it captures the market’s real occupancy change. Rising net demand alongside fewer exits suggests companies are no longer surrendering space at scale, but are instead recalibrating offices for new work models.

Makati and BGC keep the quality premium

Demand across Metro Manila remains uneven. Makati attracted transactions because of available fitted spaces and the prestige of Ayala Avenue addresses. Bonifacio Global City, or BGC, maintained lower vacancy than the broader market because of modern buildings, infrastructure, multinational tenants and limited supply of quality space.

That is widening the gap between high-quality and older buildings. Tenants are willing to pay for energy efficiency, transit access, reliable building systems and the ability to move in quickly without heavy fit-out spending. Older assets in weaker locations are forced to compete through discounts, rent-free periods and fitted-space offers.

Outsourcing remains a pillar, but not the only one

Information technology and business process management, or IT-BPM, remains a key source of office demand in the Philippines. The sector covers outsourced office, customer-service, finance, technology and business functions for global companies. According to IBPAP, the industry was on track to reach $40 billion in export revenues and 1.9 million jobs in 2025, adding around 80,000 jobs and $2 billion in revenue.

The office market, however, can no longer rely on a single engine. After the pandemic, IT-BPM companies have used hybrid work more actively, split teams between Manila and provincial hubs and optimized space requirements. Market resilience now depends more on global capability centers, local corporations, government agencies, professional services and financial firms.

Energy has become the new office risk

Colliers warned that energy volatility is becoming a strategic risk for Philippine office real estate. Electricity is among the largest operating costs for office buildings, and the Philippines imports more than 90% of its oil requirements, making the economy exposed to external price shocks. Higher oil and gas prices can raise utility charges, pressure landlords and reduce net operating income for energy-inefficient buildings.

For tenants, that means office decisions increasingly depend not only on base rent, but on total occupancy cost. Companies are looking at building energy efficiency, service charges, transport access and the ability to scale space flexibly. Buildings with lower operating costs can therefore gain an advantage even when their headline rent is higher.

The economy slowed, but services kept growing

The Philippine economy expanded 2.8% year on year in the first quarter of 2026, while the services sector grew 4.5%. Agriculture fell 0.2%, industry declined 0.1% and gross capital formation contracted 3.3%. For offices, this is a mixed signal: overall growth is weak, but the service economy that drives office demand remains the positive part of the macro picture.

Slower gross domestic product growth limits expansion plans, especially among local companies tied to consumer demand. But service-sector growth supports employment in office-using industries including finance, business services, outsourcing, public administration, education, healthcare and digital services.

Quality assets are diverging from older stock

Cushman & Wakefield said Metro Manila office conditions improved in the first quarter of 2026, with Prime and Grade A vacancy rates dropping to 17.1% from 17.9% in the previous quarter. Average office yields slipped to 6.70%, while prime assets in Makati, BGC and Ortigas remained stable because of scarcity, tenant preferences and better amenities.

That means investors and tenants are increasingly separating the market into two categories. The first is modern buildings with good transit access, resilient systems, employee amenities and credible environmental, social and governance standards. The second is older stock that needs capital upgrades and must compete mainly on price.

Provincial markets are uneven

Outside Metro Manila, demand remains concentrated in established outsourcing hubs and infrastructure-linked corridors. Cebu, Iloilo and Clark continue to attract tenants because of labor availability, lower costs and regional diversification. But provincial markets are more sensitive to the quality of available stock: if a key business park lacks suitable space, demand can move to another city even when corporate requirements remain intact.

For companies, provincial offices help reduce costs and limit exposure to Manila. For second-tier cities, they create jobs, tax revenue, retail demand and housing demand. But their durability depends on transport, internet connectivity, power supply, universities and the ability of local governments to support large corporate projects.

Stability does not mean immunity

The defining feature of the Philippine office market in 2026 is stability without excess confidence. Vacancy is easing slowly, deals continue, quality buildings retain tenants, but geopolitics, energy, inflation and expensive money are already making companies more selective. If the Middle East conflict continues to keep fuel prices high, tenants may move faster toward cheaper locations, flexible offices or hybrid work.

For landlords, that means investing in building upgrades, energy efficiency, fitted solutions and more flexible lease terms. For investors, it means more selective asset buying: the market no longer rewards every office building simply because it is in Metro Manila. It rewards quality, controllable operating costs and the ability to retain tenants during external uncertainty.

As experts at International Investment report, the resilience of the Philippine office market looks real but fragile: the sector is being supported by services, outsourcing and the absence of new supply in the first quarter, not by a full investment boom. The critical risk is that expensive energy and slow economic growth could quickly turn stable vacancy into pricing pressure for landlords, especially in older buildings and weaker submarkets.

Manila’s property market is entering a more cautious phase as the Middle East crisis adds pressure to household income, construction costs and interest rates at a time when the capital’s condominium market is already dealing with excess supply and weak demand.

Manila housing faces a new external shock

Major Philippine developers are adjusting strategy as the macroeconomic backdrop deteriorates. The Business Times reported on May 11, 2026, that Manila’s residential and retail segments remain vulnerable after the pandemic, with condominium sales in the first quarter of 2026 on course for record-low take-up rates, according to Colliers Philippines, while developers face higher construction costs, elevated borrowing costs and weaker purchasing power linked to the Middle East crisis.

For the industry, the shift points to a move away from aggressive launches and toward cash-flow protection. In practice, that usually means fewer new projects, longer payment terms, discounts, greater focus on completed inventory and more selective capital allocation. The pressure is most visible in the National Capital Region, where apartment demand has long depended on middle-income buyers, investors, renters and remittances from Filipinos working overseas.

Remittances have become a property-market risk

The link between the Middle East crisis and Philippine real estate runs through labor markets and remittances. The Bangko Sentral ng Pilipinas, the country’s central bank, records overseas workers’ cash remittances as a key source of household income: total inflows reached $35.63 billion in 2025, while January–February 2026 remittances rose to $5.81 billion from $5.63 billion a year earlier.

The Middle East remains a major destination for Filipino workers. Inquirer reported that remittances from the region totaled about $6.5 billion in 2025, roughly 18% of all inflows, with more than 2.4 million Filipinos working there. The report also cited a government scenario in which remittances could fall sharply under a full deployment ban and large-scale repatriation.

For developers, this is a direct demand risk. Remittances are often used for down payments, mortgage servicing and apartment purchases by migrant families. Any disruption to overseas employment, evacuation of workers or rise in household expenses can quickly affect mid-market housing sales.

Condo oversupply weighs on prices and sales

Manila’s condominium market was already overloaded before the latest geopolitical shock. BusinessWorld, citing Colliers, reported that residential vacancy in Metro Manila could rise to 25% in 2026 as unsold units in the mid-income and lower mid-income segments continue to weigh on the market. Vacancy ended 2025 at 24.7%, up from 23.9% in 2024.

The weakest point is the lower mid-income segment. In the first quarter of 2026, BusinessWorld reported, citing a Colliers market report, that cancellations in the 3.6 million to 7 million Philippine peso price bracket reached 2,024 units, exceeding take-up of 1,720 units. The affordable segment was stronger, with 1,629 units taken up against 728 cancellations.

That pattern suggests a purchasing-power problem, not merely excess supply. Buyers who entered payment plans when rates were lower and recovery expectations were stronger now face higher living costs, more expensive financing and uncertainty over income. For developers, this means slower capital turnover and a harder task selling completed inventory without openly cutting headline prices.

Inflation and rates reshape buyer calculations

The macroeconomic backdrop weakened almost simultaneously with housing demand. The Philippine Statistics Authority said headline inflation accelerated to 7.2% in April 2026 from 4.1% in March, bringing the January–April average to 3.9%. A year earlier, April inflation stood at just 1.4%.

The Bangko Sentral ng Pilipinas listed the target reverse repurchase rate at 4.50% as of May 12, 2026, with the overnight lending rate at 5.00% and the overnight deposit rate at 4.00%. For homebuyers, that means higher debt-servicing costs; for developers, it means more expensive capital and greater caution before launching new phases.

The broader economy also slowed. The Philippine Statistics Authority estimated first-quarter 2026 gross domestic product growth at 2.8% year on year, while gross capital formation declined 3.3%. That leaves less room for a quick recovery in sectors tied to consumer confidence and long-term credit.

Retail property is steadier but not immune

Retail property looks more resilient than housing, but it is also exposed to the shock. Colliers’ 2026 Philippine property outlook said mall refurbishment, tenant-mix changes and experience-led retail formats remain central to competitiveness, while some future supply is shifting outside Metro Manila.

Manila malls depend not only on rents but also on foot traffic, consumer spending and the ability of international brands to expand despite higher logistics costs. If the Middle East crisis keeps fuel and transport costs elevated, tenants may become more cautious about store openings, while mall owners may need to offer more flexible lease terms.

Developers move to protect balance sheets

The defensive turn among Philippine developers does not mean the market has stopped. It signals a transition from volume-led growth to risk management. Companies with strong balance sheets, land banks and diversified portfolios should be better placed to endure a period of weak sales than smaller players tied to a single segment or location.

Buyers are gaining more room to negotiate. Discounts, longer payment terms, completed units and rent-to-own structures are becoming competitive tools. Yet the fundamental risk remains: if inflation and borrowing costs stay high, demand recovery will depend less on promotions and more on real income growth.

as International Investment experts report, the main risk for Philippine real estate is that an external shock has arrived while the domestic market is still digesting excess supply. Manila’s property market does not look structurally broken, but its recovery is becoming slower and more expensive: developers may have to sacrifice either sales speed or margins, while buyers need to focus less on promised yields and more on liquidity, payment schedules and income resilience.

The Middle East conflict is becoming a new risk factor for Philippine real estate, pushing up energy, construction, transport and financing costs while reshaping demand across offices, warehouses, residential projects, retail assets and hotels.

Energy shock reaches property costs

The Philippine property market entered the second quarter of 2026 with a sharper external shock. The cited May 11 report said the conflict is reshaping the sector by lifting construction, energy and financing costs, forcing developers and occupiers to reassess investment decisions.

The May commentary by Cushman & Wakefield Philippines identified disruptions to global energy routes, including risks around the Strait of Hormuz, as the main transmission channel. Because the Philippines relies heavily on imported energy, higher fuel prices feed directly into construction materials, freight, site operations, equipment use, utilities and building maintenance. The firm expects a temporary narrowing of the new supply pipeline as developers recheck project feasibility under higher cost assumptions.

Developers face a new cost base

Projects in planning or early construction are the most exposed. Higher fuel prices raise the cost of moving cement, steel, equipment and finishing materials. More expensive electricity increases the cost of running construction sites and completed buildings. If banks remain cautious because of inflation, credit also becomes more expensive, reducing developer margins.

The practical result is a market where some companies delay launches, phase delivery or secure materials earlier to lock in prices. That strategy improves cost visibility but requires more working capital and more warehouse space. The conflict is therefore affecting not only property prices but also procurement, construction schedules and financing structures.

Inflation widens the market split

The macroeconomic backdrop is worsening affordability. The Philippine Statistics Authority reported that inflation reached 7.2% in April 2026, driven by food, transport, utilities and fuel; housing, water, electricity, gas and other fuels contributed 1.7 percentage points, while food inflation accelerated to 6.1%.

That matters directly for housing. When households spend more on food, transport and electricity, they have less room for mortgages and home purchases. Mid-market housing becomes more sensitive to interest rates, down payments and monthly amortization. Premium housing behaves differently: affluent buyers are more likely to treat real estate as an inflation hedge, allowing high-quality condominiums, landed homes and well-located projects to hold demand better than mass-market supply.

Outsourcing supports office demand

The office market is receiving mixed signals. Higher energy costs and uncertainty encourage companies to optimize space and use hybrid work, meaning employees split time between the office and remote work. At the same time, the information technology and business process management sector remains a structural demand driver for the Philippines. This sector provides outsourced services such as customer support, accounting, analytics and digital operations for international clients.

The sector may benefit if global companies seek lower-cost locations during a period of cost pressure. That would support office demand in Metro Manila, Cebu and other business hubs. Still, tenants are likely to pay closer attention to electricity costs, employee transport, workplace density and the efficiency of every leased square meter.

Warehouses become defensive assets

Logistics real estate appears to be one of the more resilient segments. Higher fuel costs and global shipping uncertainty are pushing companies away from just-in-time inventory, where goods arrive with minimal buffers, toward just-in-case strategies, where businesses hold more stock near customers.

For the Philippines, that increases the value of warehouses near ports, airports, transport corridors and large urban centers. Import-dependent companies, e-commerce operators and retailers need space for buffer inventory. As a result, logistics and industrial parks may retain demand even as broader economic growth slows.

Retail and hotels face fuel-linked pressure

Retail and hospitality assets are more directly exposed to weaker consumer spending. If families spend more on essentials and transportation, discretionary purchases decline. For mall landlords, that can mean pressure on tenant sales, rent negotiations and slower network expansion.

Tourism is also sensitive to aviation fuel. Higher airfares can reduce international arrivals and delay new hotel projects. For resort real estate, the issue is especially important because demand depends not only on domestic income but also on flight prices, insurance costs and regional security perceptions.

Remittances remain a housing pillar

Another risk runs through overseas Filipino workers. Remittances support consumption, mortgage payments and home purchases by families inside the country. According to Bangko Sentral ng Pilipinas, personal remittances reached $39.62 billion in 2025, while cash remittances through banks reached $35.63 billion; in January–February 2026, personal remittances totaled $6.46 billion and cash remittances stood at $5.81 billion.

If the Middle East conflict affects the jobs, safety or income of Filipino workers in the region, housing demand from remittance-receiving families could soften. The flows remain resilient for now, but developers that sell to overseas-worker households need to price this risk into sales and financing assumptions.

Growth outlook has been cut

The broader economy is also weaker. The Asian Development Bank lowered its 2026 Philippine growth forecast to 4.4% in April, citing global uncertainty and risks linked to the Middle East conflict. Slower growth usually means weaker business confidence, more cautious banks and a tougher market for developers that rely on pre-sales and stable tenant demand.

That does not make Philippine real estate uniformly weak. The market is becoming more polarized: quality warehouses, premium housing and offices tied to resilient international tenants may outperform, while mass-market housing, weaker retail locations and leveraged hotel projects face more pressure.

Banks remain a partial buffer

The financial system is an important cushion. Bangko Sentral ng Pilipinas has said risks to banks from Middle East volatility are mostly transmitted through indirect channels rather than direct exposures, while local reports have pointed to banking assets of about ₱30 trillion and solid capital buffers.

For property, this reduces the likelihood of an abrupt credit shock. But it does not remove the cost-of-capital problem. If inflation remains high, banks will assess borrowers more strictly, and developers may need more time to secure project financing.

As experts at International Investment report, the conflict is not destroying the Philippine property market; it is changing its internal geography and return structure. Weak projects with high leverage, imported-material exposure and mid-market buyers are becoming more vulnerable. Completed quality assets, logistics facilities near transport nodes, premium homes and offices with resilient tenants are gaining relative advantage because new supply is becoming harder to deliver. The critical risk is that inflation may support real estate as a defensive asset while simultaneously damaging affordability and slowing real transactions.

FAQ

How does the Middle East conflict affect Philippine real estate?

It raises energy, fuel, freight, construction-material and financing costs. Developers then need to reassess budgets, project timing and demand assumptions.

Which real estate segments look more resilient?

Logistics, industrial real estate, premium housing and offices linked to the information technology and business process management sector look more resilient than mass-market and discretionary-spending segments.

Why is mid-market housing at risk?

Middle-income buyers are more dependent on mortgages and more exposed to higher food, transport and utility costs. Inflation reduces their ability to buy homes or service loans.

What does just-in-case logistics mean?

It means companies keep more inventory in warehouses to protect against supply disruptions. This increases demand for storage near ports, airports and major cities.

Can overseas-worker remittances support housing demand?

Yes. Remittances remain a major source of household income and housing demand. But if the conflict affects Filipino workers abroad, especially in the Middle East, that support could weaken.

Philippine President Ferdinand Marcos Jr. said on April 13, 2026 that the government is removing excise taxes on liquefied petroleum gas and kerosene as part of a broader effort to contain food inflation and reduce household fuel costs amid another jump in global energy prices. Bloomberg first reported the move, and it was later confirmed by the Presidential Communications Office and the Philippine News Agency.

Marcos said the measure is intended not only to lower household fuel expenses but also to keep food prices in check, since energy costs quickly feed into transport, storage and preparation costs across the food chain. He also said the government plans to lower tariffs on some farm imports, reduce transport costs for food products and work with producers to keep prices of basic goods stable at least through the end of April.

Philippines suspends excise tax on LPG and kerosene

The official government statement says the excise tax on liquefied petroleum gas and kerosene was lifted in response to the current energy emergency. The Philippine News Agency added that Marcos invoked the authority granted to him under Republic Act No. 12316. That law, approved in 2026, allows the president to suspend or reduce excise taxes on petroleum products under specified oil-price conditions.

According to Deloitte’s summary of the measure, Republic Act No. 12316 permits a suspension or reduction of petroleum-product excise taxes when the average Dubai crude price reaches $80 a barrel for one month. Any suspension can last for no more than three months at a time and no more than one calendar year in total, after which the tax rates automatically revert to the levels stated in the Tax Code. That makes the current policy a temporary anti-inflation step rather than a permanent tax rewrite.

How much LPG and kerosene prices may fall

Marcos said the removal of the excise tax should lower LPG prices by about 3.36 pesos per kilogram, or roughly 37 pesos per standard tank, while kerosene prices could fall by 5.60 pesos per liter. Those expected reductions were repeated by local media and official channels after the announcement. For consumers, the move means direct relief on fuels that are widely used for cooking and day-to-day household needs.

Liquefied petroleum gas is especially important for low- and middle-income households because it remains a common cooking fuel, while kerosene still matters for some vulnerable households and small businesses. That is why the administration is presenting the decision as both a social-protection and inflation-management measure.

Why Manila links fuel taxes to food inflation

The government’s central argument is that food prices in the Philippines depend not only on harvests and imports, but also on transport and preparation costs. Marcos said all of the newly announced measures are centered on keeping food prices down. In the administration’s view, rising global oil prices after failed Iran-related talks and renewed energy-market tension could quickly spill over into the cost of basic goods.

That linkage matters politically in the Philippines, where food inflation is highly sensitive. The tax decision is therefore being paired with trade measures as well: the president said tariffs on some agricultural imports will be lowered and producers are being asked to help prevent a sharp increase in the prices of basic commodities.

What the tax cut could cost the Philippine budget

Fuel-tax relief comes with a fiscal cost. In March, the Bureau of Customs warned that a broad suspension of excise taxes and value-added tax on petroleum products could reduce government revenue by at least 330 billion pesos, or around 30% to 40% of the agency’s annual collections. Separately, Inquirer reported that the Department of Finance estimated that suspending fuel excise taxes alone could cost 136 billion pesos in 2026.

That helps explain why the current action is limited to LPG and kerosene rather than extended immediately across the full fuel complex. Bloomberg said Marcos and his cabinet are still discussing additional ways to keep prices under control, including a possible wider halt in oil excise taxes, but for now the government has moved only on the two fuels seen as most directly sensitive for households.

What the move means for the Philippine economy

For the broader economy, the decision signals a more interventionist approach to managing imported inflation. The government is trying to cushion households, contain food-price pressure and prevent a wider rise in inflation expectations at a time when the Philippines remains highly exposed to global oil and liquefied gas prices.

The effectiveness of the move will depend on whether the tax relief remains temporary and targeted or has to be expanded if energy prices stay elevated for longer. If fuel costs remain high, policymakers will have to balance household relief, food-price stability and fiscal losses more carefully.

As International Investment experts report, the removal of excise taxes on LPG and kerosene in the Philippines is a fast and politically clear support tool for households, but its lasting inflation impact will depend on whether the government can also contain transport costs, imported food prices and budget losses at the same time.

FAQ

What taxes did the Philippines remove?
The government removed excise taxes on liquefied petroleum gas and kerosene.

When was the decision announced?
President Ferdinand Marcos Jr. announced it on April 13, 2026.

Why did the Philippines cut LPG and kerosene taxes?
To reduce household fuel costs and help contain food inflation.

How much are prices expected to fall?
Authorities said LPG prices could fall by about 3.36 pesos per kilogram, or 37 pesos per tank, and kerosene by 5.60 pesos per liter.

What law allows the president to do this?
Republic Act No. 12316 allows the president to suspend or reduce fuel excise taxes when world oil prices meet specified thresholds.

Does the measure include gasoline and diesel?
As of April 13, 2026, the official announcement covered LPG and kerosene only, while broader fuel-tax options remain under discussion.

Philippines freezes spot power market amid fuel shock

The Philippines on March 26, 2026 suspended electricity sales on the WESM, or Wholesale Electricity Spot Market, the country’s real-time wholesale power exchange where prices are set by market conditions. Authorities said the move was driven by fuel supply risks and sharp price volatility linked to the war in the Middle East. The suspension was imposed without a fixed end date.

Why the Philippines suspended the WESM

The market intervention followed a broader emergency response. On March 24, President Ferdinand Marcos Jr. signed Executive Order No. 110, declaring a state of national energy emergency. According to the Associated Press and Philippine News Agency, the measure was introduced as the government warned of threats to fuel stability and broader energy security stemming from the Middle East conflict.

Days earlier, Energy Secretary Sharon Garin told Reuters the government was prepared to step into the power market to prevent another surge in electricity bills. She said power prices could rise by 16% as soon as the following month unless authorities acted, and indicated that the government was considering reducing reliance on costly LNG, or liquefied natural gas, in favor of coal-fired output and renewable energy.

How much electricity prices rose in March 2026

Data from the Independent Electricity Market Operator of the Philippines, or IEMOP, showed that average spot power prices jumped 58% this month. Prices in Mindanao and the Visayas nearly doubled, while those in Luzon, the country’s biggest demand center, rose 42%. That surge became the central justification for suspending normal market trading.

The ERC, or Energy Regulatory Commission, said the old pricing model no longer reflected market realities shaped by geopolitical tensions and fuel supply constraints. It is now shifting to a modified pricing framework. Under the temporary approach, coal plants may be paid at a fixed rate, while natural gas plants may be compensated based on contracted prices.

What changes under the temporary pricing scheme

During the suspension, the power system will operate under interim rules designed to contain prices, preserve critical fuel inventories and prioritize generation sources considered more secure or more affordable under current conditions, including renewables. The ERC also said it expected to finalize the revised pricing approach by the Wednesday following the March 26 announcement.

For Asia, this is an unusual step. Reuters noted that the Philippines is one of the few markets in the region where consumer electricity bills remain meaningfully linked to market prices rather than being fully smoothed by administratively set tariffs. That makes external fuel shocks more visible in household and business power costs.

How the Middle East war hit Philippine power costs

The shock did not originate at home. Reuters reported that logistics through the Gulf and the Strait of Hormuz deteriorated sharply after the escalation of the war involving the U.S., Israel and Iran. Spot LNG prices more than doubled and climbed to their highest level in more than three years, including after a production halt in Qatar, which supplies about one-fifth of global LNG output.

That is particularly serious for the Philippines because the country relies on imported fuel. The government has been in talks with Indonesia to secure stable coal supplies and has also explored using uncommitted domestic gas volumes for power plants that currently run purely on LNG. Meralco, the country’s biggest distribution utility, told Reuters it supported efforts to rein in prices and had sufficient contracted coal volumes.

What consumers were already paying before the suspension

Consumers were already seeing higher power bills before the market was halted. On March 10, Meralco said it was raising residential rates by 0.6427 pesos per kilowatt-hour, bringing the overall tariff to 13.8161 pesos per kilowatt-hour from 13.1734 pesos in February. For a typical household consuming 200 kilowatt-hours, that meant an increase of about 129 pesos in the monthly bill.

Meralco also said that lower charges from the WESM had partly offset other cost pressures in March, including higher transmission and reserve market charges. That matters because the full impact of the latest external fuel shock had not yet fed through to end-user tariffs, which is exactly what the government is now trying to contain through direct intervention.

Why the decision matters for the Philippine economy

Reuters had earlier noted that Philippine electricity tariffs were already among the highest in Asia and second only to Singapore in the region. For an archipelago of more than 100 million people, that means higher energy costs can quickly spill into inflation, transport expenses, industrial production costs and household spending.

The WESM suspension shows Manila has moved from warning about the risks to actively suppressing price volatility. It also marks a short-term shift away from greater dependence on gas, with the government effectively leaning on coal generation, temporary market controls and fuel conservation to stabilize the system.

As International Investment experts report, Manila’s decision illustrates how quickly an external geopolitical shock can reshape domestic energy policy in a fuel-importing economy. For investors and businesses, the key signal is not only the temporary suspension of spot trading, but the fact that the government judged price volatility severe enough to justify replacing a market mechanism with direct stabilization measures.

FAQ

What is the WESM in the Philippines?
The WESM, or Wholesale Electricity Spot Market, is the country’s wholesale spot electricity market where power is traded at prices that move with demand, supply and fuel costs.

Why did the government suspend the WESM?
Authorities cited fuel supply risks and sharp price volatility linked to the Middle East war. Average spot prices rose 58% in March, with some regional prices nearly doubling.

What are the ERC and IEMOP?
The ERC is the Energy Regulatory Commission, the country’s power regulator. IEMOP is the Independent Electricity Market Operator of the Philippines, which runs the WESM and publishes market data.

Does the suspension mean electricity bills are frozen?
No. The government did not announce a full freeze on consumer tariffs. It suspended normal spot market trading and is replacing it with a modified pricing scheme aimed at limiting further price spikes.

Why does the Middle East conflict affect Philippine electricity prices?
Because the Philippines depends on imported fuel, while disruptions in Gulf shipping and the Strait of Hormuz pushed LNG prices sharply higher and increased procurement risks.

Philippines Enters an Energy Emergency

The Philippines has declared a national energy emergency as fuel supplies tighten and oil prices rise sharply in the fallout from the Middle East war. President Ferdinand Marcos Jr. said the country faces “an imminent danger of a critically low energy supply,” and the emergency framework is meant to protect supply stability, continuity of economic activity and the delivery of essential services. According to the Associated Press, the declaration is initially set to last for one year.

The move goes beyond the fuel market alone. Under the emergency setup, the government will run a contingency structure tasked with ensuring the availability and orderly distribution of fuel, food, medicine, agricultural products and other basic goods. Authorities have also been instructed to act against hoarding, profiteering and manipulation in the petroleum supply chain.

Why the Philippines Faces a Fuel Supply Crunch

The core problem is structural. The Philippines is a net energy importer, and the International Energy Agency, or IEA, describes imported fossil fuels as an important part of the country’s energy supply. World Bank data sourced from the IEA shows the Philippines’ net energy imports at 54% of energy use in the latest comparable year, underscoring how exposed the economy is to external oil and fuel disruptions.

That vulnerability became more visible as the Middle East conflict intensified. Early in March, President Marcos said the country had roughly 50 to 60 days of supply for gasoline, fuel oil and kerosene, and he released more detailed inventory figures showing 50.5 days for diesel, 51.5 days for gasoline, 67.5 days for kerosene, 58 days for jet fuel and 29 days for LPG, meaning liquefied petroleum gas. By March 24, however, Energy Secretary Sharon Garin told senators that the worst case was that the country could “run dry,” adding that the Philippines had only about a month to a month and a half to prepare if the crisis deepened further.

That shift in official messaging is central to understanding the emergency declaration. Within weeks, the narrative moved from relative reassurance to a more explicit acknowledgment that physical shortages had become a realistic scenario if regional conflict further disrupted global oil trade. Garin also said the government was seeking alternative suppliers, including the United States and India, while negotiating for additional gasoline and diesel volumes from private-sector players.

What the Government Has Already Put in Place

The emergency declaration follows a series of conservation and market-intervention measures introduced earlier in March. A four-day onsite work arrangement for parts of the government began on March 9 as part of the effort to reduce fuel use and electricity consumption. The government’s Memorandum Circular No. 114 requires public institutions to follow strict conservation protocols, while the Department of Energy says local and national entities are expected to reduce fuel and electricity use by 10% to 20% by year-end. The rules include keeping air-conditioning at no lower than 24 degrees Celsius, turning off non-essential equipment and using fuel-saving practices for government vehicles.

The government also intervened directly in fuel pricing. On March 9, the Department of Energy imposed nationwide price ceilings on petroleum products and warned oil firms and stations that any unauthorized increases above the approved ranges could trigger administrative and criminal penalties. The agency said it had mobilized field offices and requested assistance from the police and the interior department to intensify pump monitoring.

By March 23, the energy department had added another contingency measure, issuing a circular that temporarily authorizes the controlled introduction of Euro II petroleum products for selected transport and industrial uses. In practice, that signals the government is widening the range of usable fuel products to reduce the risk of outright shortages.

How the Energy Crisis Is Hitting Transport and Consumers

The shock is already visible in retail prices and household costs. GMA News, citing Department of Energy data, reported that by March 24 the price range for RON 95 gasoline had climbed to 83.10 to 109.78 pesos per liter, diesel to 107 to 134.30 pesos per liter and kerosene to 111.99 to 165.79 pesos per liter. Garin said that even if the country avoids physically exhausting its stocks, the more likely near-term problem is that prices could become extremely high.

That is why transport relief has become a central part of the state response. AP reported that the government has begun providing 5,000 pesos each to large numbers of motorcycle taxi drivers and other public transport workers, while free bus rides have been arranged for workers and students in selected cities. Government news releases also describe broader fuel subsidy and cash-aid programs for public utility vehicle drivers, alongside temporary toll discounts for buses, freight services and other transport operators.

For the wider economy, the impact goes beyond transport. Fuel costs feed into logistics, public fares, food distribution, industrial production and inflation. In an import-dependent system, even a short-lived disruption in energy supply can quickly become a broader economic problem. That helps explain why Manila is treating the issue not as a narrow fuel-market disturbance but as a whole-of-government emergency response.

Why the Philippines Matters for Asia’s Energy Outlook

The Philippines has become one of the clearest examples of how the Iran-linked energy shock is affecting Asian importing economies. The Guardian reported that several Southeast Asian governments were already racing to conserve energy as oil prices surged and supply chains tightened. The Philippines stands out because it moved beyond conservation steps and formally declared a national energy emergency.

The crisis is also beginning to reshape the region’s short-term fuel mix. Associated Press reported that several Asian countries, including the Philippines, are increasing coal use as oil and LNG, meaning liquefied natural gas, become harder to secure. That suggests the immediate response to a supply crisis may delay parts of the energy transition, as governments prioritize availability and system resilience over long-term decarbonization goals.

As International Investment experts report, Manila’s decision matters well beyond the Philippines itself. It shows how quickly an external oil shock can turn into a broader inflation, transport and policy crisis in an economy with high import dependence and limited room for disruption. For Asian energy-importing markets, the Philippine case is a reminder that energy security is no longer only about price. It is also about physical access, emergency governance and the resilience of essential services.

FAQ

What exactly did the Philippines declare
President Ferdinand Marcos Jr. declared a national energy emergency on March 24, 2026, citing “an imminent danger of a critically low energy supply.” The declaration is initially set to last for one year.

Why is the country at risk of fuel shortages
The Philippines depends heavily on imported energy and is vulnerable to disruptions in global oil flows, especially those linked to the Middle East conflict and risks around the Strait of Hormuz.

How much fuel did the country have in reserve
On March 4, officials said the Philippines had about 50 to 60 days of supply for major fuels, but by March 24 the energy secretary said the worst case could be depletion and that authorities had only about one to one and a half months to prepare.

What measures are already in effect
The government has imposed conservation rules, introduced a four-day workweek for parts of the public sector, capped fuel prices, rolled out transport subsidies and temporarily allowed controlled use of selected Euro II fuel products.

What do LNG and LPG mean
LNG stands for liquefied natural gas. LPG stands for liquefied petroleum gas, a fuel commonly used by households and some transport segments.

Philippine tourism is still trailing regional rivals

The Philippine tourism industry remains a major part of the economy, but in 2025 it again underperformed relative to several Southeast Asian peers. According to the Department of Tourism, the country ended 2025 with 6.484 million total inbound arrivals, including 5.941 million foreign visitors and 543,085 returning overseas Filipinos, while tourism receipts reached PHP 694 billion. That amounted to recovery, but not breakout growth: the foreign visitor count remained well below the scale seen in competing regional markets.

That gap has sharpened debate over why a country with globally marketable beaches, widespread English use, a strong service culture and a strategic Asian location still fails to convert those strengths into arrival volumes comparable with Thailand, Malaysia or Vietnam. A new Hospitality Net opinion essay by hospitality technology consultant Terence Ronson framed the issue bluntly, arguing that the Philippines does not lack strategy on paper so much as coordination, commercial leadership and disciplined execution.

Tourism data show how far the Philippines still lags

The contrast with regional peers is now stark. Vietnam’s national tourism authority says the country welcomed 4.68 million international visitors in the first two months of 2026 alone, up 18.1% year on year. Industry reporting on official data put Vietnam’s full-year 2025 international arrivals at a record 21.2 million. Thailand finished 2025 with about 32.97 million foreign arrivals, while Malaysia reported 42.2 million total tourist arrivals as it prepared for Visit Malaysia 2026. Against that backdrop, the Philippines’ 5.94 million foreign visitors in 2025 looks less like a recovery story than a clear case of unrealized tourism capacity.

The shortfall is now openly acknowledged inside the country. ABS-CBN described the situation earlier this year as a “tourism paradox,” noting that the Philippines has the largest tourism economy in ASEAN by GDP contribution while still trailing its neighbors in actual foreign visitor numbers. The Straits Times also reported that by the first 11 months of 2025, the country remained about 37% below pre-pandemic international arrival levels, with travelers increasingly complaining that travel across the archipelago feels expensive and inconvenient.

The problem is not only branding

The clearest conclusion emerging from both public debate and industry analysis is that the Philippines’ tourism problem cannot be reduced to marketing alone. The Department of Tourism continues to push the Love the Philippines brand and has also argued that the country is underfunded relative to regional rivals, saying only PHP 100 million was available for promotion in 2025 and that it wanted PHP 500 million for branding and promotion in 2026. But even as officials defend the need for more spending, the industry conversation has shifted toward a harder diagnosis: execution, not slogans, is where the system breaks down.

That is why criticism has focused on fragmented accountability and weak links between transport, airports, hotels, local governments, digital platforms and destination clusters. In its recent analysis of the Philippines’ next tourism growth phase, AMRO said long-standing infrastructure gaps continue to constrain accessibility, competitiveness and visitor experience. BusinessMirror, reporting from the ASEAN Tourism Forum 2026, said one of the most frequent complaints raised by travelers and acknowledged by officials was the high cost of airfares and the difficulty of moving between islands.

Connectivity remains the biggest bottleneck

For an archipelagic country, logistics are central to tourism performance. Growth depends not only on landing more international passengers, but on how easily visitors can move from airport to resort, from Manila to secondary islands, and from leisure trips into higher-value business, event, medical and wellness segments. This is where the Philippines continues to lose ground to more integrated regional systems. At the ASEAN level, tourism and transport officials are already discussing how to close connectivity gaps, improve access to emerging destinations and support more coordinated multimodal travel. For the Philippines, those issues matter even more because geography magnifies every inefficiency in the system.

The problem is made more expensive by the country’s limited ability to scale higher-yield tourism without the right infrastructure. Ronson’s analysis singled out MICE, sports tourism, health and wellness as segments that remain underdeveloped relative to their potential. At the same time, industry reporting in early 2026 suggested the country is trying to move beyond a simple leisure-led recovery toward a more diversified and more profitable visitor mix. Without faster access, stronger airport capacity and better integrated journey management, that shift is likely to remain incomplete.

Execution and leadership are now the central market issue

What makes the 2026 debate more serious is that the conversation is moving away from whether the Philippines needs more promotion and toward who is actually accountable for results. In his essay, Ronson argues for a “tourism operating system” mindset in which decisions are data-led and responsibility is tied to measurable deliverables. That argument has echoed across other recent commentary. The Diplomat wrote about tensions between government claims of high tourism returns and the more cautious reading of private investors looking at actual risk and yield. Philstar, meanwhile, reported in late 2025 that consultants expected a stronger tourism rebound in 2026 if international connectivity and public-private coordination improved.

For the market, that is the real sign of an inflection point. The Philippines does not look like a failing destination. Tourism revenues in January 2025 already topped PHP 65 billion and exceeded comparable pre-pandemic levels, while officials projected tourism output could reach PHP 5.9 trillion. But the way the discussion has evolved shows that the private sector increasingly wants implementation speed, not just strategic language.

What needs to change next

The practical agenda is becoming easier to define. The sector needs more disciplined execution, a more unified data layer across tourism stakeholders, better capacity management, faster airport and inter-island connectivity, and sharper market-by-market positioning. It also needs more precise digital targeting, including AI-assisted segmentation and conversion-oriented marketing rather than broad awareness campaigns alone. Those themes are now appearing both in local industry commentary and in the wider ASEAN tourism policy discussion for 2026.

The larger conclusion is straightforward. The Philippines still has the assets, but it no longer has the luxury of relying on assets alone. If it fails to cut logistical friction and improve system coordination, regional competitors will continue to scale faster and widen the gap in arrivals and visitor yield. If it succeeds, the country could improve performance materially without reinventing its tourism product.

As International Investment experts report, Philippine tourism is not at a point of decline so much as a test of its growth model. The country has already shown it can generate substantial economic value from tourism, but the next phase will depend less on campaigns and more on whether it can build an execution system that turns interest into consistent arrivals, stronger spending and more durable returns for private capital.

Coast Guard suspends maritime operations in Quezon

The Philippine Coast Guard has temporarily suspended small vessel operations in the northern part of Quezon province as strong winds and rough seas affect coastal waters. The measure took effect on March 13, 2026 and aims to prevent maritime accidents during hazardous weather conditions caused by the northeast monsoon.

According to the Philippine Atmospheric, Geophysical and Astronomical Services Administration (Pagasa), strong to gale-force winds are affecting coastal areas of northern Quezon, particularly regions facing the Pacific Ocean.

The suspension applies to vessels with a gross tonnage of 250 or less, including small passenger boats and fishing vessels that are particularly vulnerable to rough sea conditions.

Northeast monsoon creates dangerous sea conditions

The dangerous weather is linked to the northeast monsoon, locally known as Amihan. This seasonal weather pattern regularly brings strong winds and rough seas to the eastern seaboard of the Philippines.

Meteorologists warn that wave heights may reach between 2.8 and 4.5 meters in affected areas. Such conditions significantly increase the risk of maritime accidents, particularly for small vessels that may struggle to maintain stability in turbulent waters.

The most exposed locations include the northern and eastern coastal areas of Polillo Island, which face the open Pacific Ocean.

Island communities and coastal routes affected

The advisory affects several coastal municipalities in northern Quezon province. Areas including General Nakar, Panukulan, Burdeos, Patnanungan and Polillo Island are under the suspension order.

Many communities in this region rely heavily on small vessels for transportation between islands and mainland areas. While these boats play an essential role in regional connectivity, they are also highly vulnerable during severe weather conditions.

The Coast Guard stated that the suspension will remain in place until sea conditions improve and updated forecasts confirm it is safe to resume operations.

Maritime safety measures remain critical

As an archipelago of more than 7,000 islands, the Philippines depends heavily on maritime transport for economic activity and daily mobility. Weather disruptions such as monsoons, storms and rough seas frequently affect transportation networks.

Authorities emphasize that suspending vessel operations during severe weather is a preventive measure designed to protect passengers, fishermen and maritime workers.

Travelers and residents are advised to monitor official weather advisories and adjust travel plans accordingly.

As experts at International Investment report, weather events such as monsoon-driven storms remain a major factor affecting transportation infrastructure and tourism across Southeast Asian island nations. Timely decisions by authorities to suspend maritime operations play a crucial role in reducing risks for travelers and protecting coastal communities.

Rising crude prices threaten inflation and fiscal stability

Oil prices climbing above $100 per barrel are beginning to place significant strain on Asian economies, as the deepening conflict in the Middle East intensifies energy market volatility. Governments across the region now face a difficult choice between expanding fuel subsidies to protect consumers or allowing inflation to surge.

Economists warn that Asia has become the epicenter of the current energy security shock. Many countries in the region depend heavily on imported crude oil, much of which passes through the strategically critical Strait of Hormuz. Disruptions to supply routes can quickly translate into higher fuel prices, rising import bills, and broader economic instability.

If the conflict persists and oil prices remain elevated, analysts say the region could face a period of stagflation characterized by slowing growth and accelerating inflation.

Government budgets under increasing pressure

Governments across Asia are already exploring policy responses to cushion the economic impact. Fiscal measures are expected to play the first line of defense, including expanded fuel subsidies, reductions in fuel excise taxes, and temporary cuts to import tariffs on crude oil and refined products.

However, these policies could place additional pressure on already strained public finances. Many Asian economies entered the current crisis with elevated debt levels and limited fiscal space to absorb new shocks.

Credit rating agency Fitch has warned that rising oil prices could increase credit risks across emerging markets. Higher energy import bills and expanding subsidy costs could weaken fiscal balances while simultaneously disrupting tourism revenues, remittance flows, and investment activity.

India and the Philippines among the most exposed

Analysts identify India and the Philippines as among the economies most vulnerable to rising energy prices.

In both countries, net fossil fuel imports exceed three percent of gross domestic product, making them highly sensitive to changes in global oil prices.

India imports nearly 90 percent of its crude oil needs. According to estimates from IndusInd Bank, a sustained increase of just one dollar in oil prices could widen the country’s annual trade deficit by approximately $1.5 billion.

Higher fuel prices also risk accelerating inflation and weakening consumer spending, which remains a crucial driver of economic growth in many Asian economies.

Currency and bond markets react to energy shock

Financial markets across Asia have already begun responding to rising oil prices.

The Indian rupee, Indonesian rupiah, and Philippine peso recently fell to record lows against the US dollar. Investors have also adjusted expectations for regional monetary policy as inflation risks increase.

Central banks that were previously expected to cut interest rates may now be forced to delay easing cycles or maintain tighter policy to contain inflation pressures.

Government bond markets also reacted quickly. Indonesia’s two-year bond yields rose sharply, while similar maturities in Thailand also climbed as investors priced in more hawkish policy expectations.

Governments introduce emergency economic measures

Several Asian governments have already begun implementing measures to protect domestic economies from the oil price shock.

Vietnam plans to remove import tariffs on fuel and require crude oil not yet committed for export to be sold to domestic refineries.

The Philippines is considering emergency powers to suspend fuel taxes, warning that inflation could reach a three-year high as early as April.

Malaysia has announced plans to maintain the subsidized price of its most widely used fuel for at least two months despite rising oil prices.

Indonesia has also pledged to maintain fuel subsidies, particularly as millions of citizens prepare to travel during the Ramadan holiday period.

Fiscal risks and long-term economic implications

Supporting fuel prices could significantly increase government spending and widen fiscal deficits. In Indonesia, authorities estimate that an average oil price of around $92 per barrel this year could expand the budget deficit to approximately 3.6 percent of GDP, exceeding the country’s legal limit.

Credit rating agencies Moody’s and Fitch have already revised Indonesia’s rating outlook amid growing fiscal concerns.

Many emerging economies have limited financing options and restricted access to global capital markets, making it more difficult to absorb prolonged energy price shocks.

The Strait of Hormuz remains a critical vulnerability

A key concern for policymakers is the region’s heavy reliance on oil shipments passing through the Strait of Hormuz.

A large share of crude supplies destined for China, Japan, South Korea, and Southeast Asia travels through this narrow maritime corridor. Any disruption to shipping routes could trigger further spikes in oil prices and energy shortages.

China, the world’s largest oil consumer, holds substantial strategic petroleum reserves that could help mitigate short-term supply disruptions. Japan, however, may face additional economic pressure as a weaker yen increases the cost of imported energy.

As experts at International Investment report, the surge in oil prices above $100 highlights the structural vulnerability of many Asian economies to energy market shocks, where heavy reliance on imported fuel, limited fiscal buffers, and currency pressures can combine to amplify inflation risks and slow economic growth across the region.

Georgia shows continued growth despite regional energy shock

While many Asian economies face mounting pressure from rising oil prices, some countries in the wider Eurasian region are demonstrating stronger economic resilience. Georgia has emerged as one of the fastest-growing economies in the broader region, maintaining robust growth despite global energy volatility and geopolitical uncertainty.

According to international financial institutions, Georgia’s economy expanded by around 9.4% in 2024 after growth of about 7.8% in the previous year. Economic momentum remained strong in 2025, with growth estimated at roughly 7%, while medium-term forecasts suggest the economy could stabilize at about 5% annual growth in the coming years.

Several structural factors have supported this expansion. Georgia has benefited from the rapid development of its services sector, tourism industry, and logistics infrastructure. The country has also strengthened its role as a key transit corridor between Europe and Asia, particularly for trade and transportation routes connecting the Black Sea region with Central Asia and the Middle East.

Tourism continues to play a crucial role in economic growth. Tourism revenues exceeded approximately $4.7 billion in 2025, while early data from 2026 shows continued expansion, with tourism income increasing by more than 13% year-on-year.

At the same time, foreign investment in real estate, hospitality, and infrastructure projects has increased significantly. Cities such as Tbilisi and Batumi have become major centers of development, with Batumi evolving into a leading tourism and port hub on the Black Sea following years of investment in hotels, urban infrastructure, and transport connectivity.

Despite global risks linked to energy price volatility and regional geopolitical tensions, international organizations expect Georgia’s economy to remain resilient. Growth is projected to remain around 5–6% in the coming years, supported by infrastructure investment, expanding tourism, and the development of the country’s digital and logistics sectors.

As experts at International Investment report, amid global energy volatility and rising oil prices, Georgia continues to demonstrate strong economic momentum driven by tourism growth, infrastructure investment, and its strategic position as a transport and trade hub connecting Europe and Asia, strengthening its long-term investment attractiveness in the South Caucasus region.