Iran War’s Major Effects on Philippine Economy

Is the Philippine Economy Affected By Iran War?

The adverse consequences of the conflict between US-Israel and Iran depends on its duration. In the Philippines, the major effect will be the oil-price induced inflation as well as the potential deployment of overseas Filipino workers in the Middle East. But can this escalating conflict also significantly affect the real estate industry in the country? Read this and learn how you can manage your real estate investments while the Iran war is still ongoing.

​Risks of Iran War for Filipinos

The Iran war has already affected many other countries within the Gulf region. Unfortunately, they are the main source of our country’s imported oil and a main destination of OFWs. The negative impact has already been felt in the stock market index movements as well as in the dollar-peso exchange rate.
The stock market indicates expectations on the potential profitability of domestic companies in the future. However, the Philippine Stock Exchange Index has significantly dropped, equaling to a 5% decrease after the initial attack of the US and Israel on Iran. Movements in peso-dollar exchange rate also show risk sentiment and market expectations. Domestic currency appreciates during high demand because of reduced risk or positive growth expectations.
In terms of inflation, fuel prices have gone up since February and could further increase if the Iran war continues. As expected, basic needs will be much more expensive for the masses, making the cost of living in the Philippines unbearable. This is all because oil price hikes automatically increase production costs, transportation costs, and energy costs. Transport operators and manufacturing companies may endure temporary price hikes in petrol, but not extended increases.

Potential Effects on Real Estate

Due to uncertainty, the global economy has been put at potential risk, such as rising interest rates that may result to delayed planned investments. The Iran war could possibly push for higher interest rates, if not delay the cuts by the BSP (Bangko Sentral ng Pilipinas). In other words, investments and borrowing costs may become higher while the conflict continues.
There’s no agreement yet on when the ongoing war will stop, would probably last for a few more weeks, but at a much lower intensity. However, repercussions are already being suffered by many people, including the Filipinos. Meanwhile, the government may manage gas supply and create time-bound subsidies to help highly affected groups, such as public transport operators and drivers.

Final Thoughts

As the Iran war continues, issues on price hikes and inflation could affect more nations that import oil from countries in the Gulf region. And if interest rates are already affected, you may delay your investments to avoid higher costs. It’s crucial to make smart moves in times of uncertainty, in this case, the Iran war. In the meantime, you may check out REALS.PH for the best property listings in Baguio City and other major cities nationwide. Our real estate agents in Baguio are always ready to assist you in making sound decisions when it comes to real estate.