(First of two parts)
By next week, the US-Iran war, triggered by the joint US and Israel attack on Tehran on Feb. 28, will officially have reached three devastating months for the global economy. This war has upended the energy, trade, travel and logistics sectors, among others hardest hit, and currently has no clear timeline for resolution.
The sectors that were immediately affected when the US and Israel attacked Iran were the travel and tourism sector, resulting in disruption in global travel resulting from the rerouting of air traffic from the vital Middle East hub that has been connecting Asia to Europe.
Overnight, the global tourism outlook dimmed following reports that Iran’s immediate retaliation targeted its GCC (Gulf Cooperation Countries) neighbors.
With the vital Middle East travel hub under attack, airline rerouting and avoidance of the region was immediate and air travel costs were the first to shoot up.
Analysts were initially hopeful and optimistic that the US-Iran conflict would be limited and that the negative economic effect would only affect this year’s performance.
However, once it became clear that the US-Israel attack on Iran would not be a short, definitive move that easily subjugated Iran, similar to what happened in Venezuela, global oil prices began to shoot up, finally sending global ripples of pain, especially for countries heavily reliant on imported crude oil.
Iran, in fact, showed the world that it could cause more global economic pain through its control of the vital Strait of Hormuz and effectively choke vital supplies of crude oil and liquefied natural gas, as well as vital petrochemical and fertilizer supplies.
Most unfortunately, it showed that the global alliance once nurtured by the US has fractured and can no longer collectively and effectively resolve the economic malaise now gripping the entire world.
For us Filipinos, the first impact was on local gas and diesel prices, rising by around 30 percent and thus impacting the transport cost of vital goods, products and services. By March, inflation rose to a two-year high of 4.1 percent, forcing the Bangko Sentral ng Pilipinas to reluctantly raise key policy rates to contain inflation.
With high oil prices and rising interest rates, the Philippine peso has lost its stability.
According to an interesting research paper by the Nigerian Journal of Sustainability Research titled “The Philippine Peso in Freefall: How the Iran War Is Crushing the Philippines’ Currency and Economy,” the Philippine peso is in the middle of one of the most severe crises in its modern history. In a matter of weeks, a currency that showed signs of stability at the start of 2026 has plunged to successive all-time lows, inflation has more than doubled, fuel prices have broken records and the economy — already bruised by a domestic corruption scandal — has been brought to its knees by a war unfolding thousands of kilometers away. What is happening to the peso right now is not just a currency story. It is the story of a nation of 117 million people caught in the economic crossfire of the 2026 US-Iran war, and of Asia’s most exposed economy learning exactly how brutal that exposure can be.”
The NJSR paper notes that the peso-dollar exchange rate stood at a relatively stable P57.6 to the dollar as recently as Feb. 28, 2026 — the day the US launched airstrikes on Iran. “Within weeks, that number had collapsed. By March 30, the peso had already hit record lows. By April 28, it breached the P61 level for the first time in history, closing at P61.30. By May 14, it had fallen further still to a new record close of P61.64 per dollar — the ninth time since the global oil shortage began that the currency had notched a fresh all-time low. On May 15, the rate sat at P61.64, representing a 2.74 percent decline over just one month and a staggering 10.40 percent drop over the past 12 months.”
The NJSR paper points out that the Philippine “peso’s fall has made it the worst-performing emerging-market currency against the dollar since the Iran war began, according to Bloomberg — trailing even the Indian rupee, which has faced its own severe pressures. The scale of the collapse is without modern precedent for the Philippine currency.”To understand why the peso has suffered more than almost any other currency in Asia, the NJSR paper explained what makes the Philippines uniquely exposed to a Middle East oil crisis. It cited that “the Philippines imports
By next week, the US-Iran war, triggered by the joint US and Israel attack on Tehran on Feb. 28, will officially have reached three devastating months for the global economy. This war has upended the energy, trade, travel and logistics sectors, among others hardest hit, and currently has no clear timeline for resolution.
The sectors that were immediately affected when the US and Israel attacked Iran were the travel and tourism sector, resulting in disruption in global travel resulting from the rerouting of air traffic from the vital Middle East hub that has been connecting Asia to Europe.
Overnight, the global tourism outlook dimmed following reports that Iran’s immediate retaliation targeted its GCC (Gulf Cooperation Countries) neighbors.
With the vital Middle East travel hub under attack, airline rerouting and avoidance of the region was immediate and air travel costs were the first to shoot up.
Analysts were initially hopeful and optimistic that the US-Iran conflict would be limited and that the negative economic effect would only affect this year’s performance.
However, once it became clear that the US-Israel attack on Iran would not be a short, definitive move that easily subjugated Iran, similar to what happened in Venezuela, global oil prices began to shoot up, finally sending global ripples of pain, especially for countries heavily reliant on imported crude oil.
Iran, in fact, showed the world that it could cause more global economic pain through its control of the vital Strait of Hormuz and effectively choke vital supplies of crude oil and liquefied natural gas, as well as vital petrochemical and fertilizer supplies.
Most unfortunately, it showed that the global alliance once nurtured by the US has fractured and can no longer collectively and effectively resolve the economic malaise now gripping the entire world.
For us Filipinos, the first impact was on local gas and diesel prices, rising by around 30 percent and thus impacting the transport cost of vital goods, products and services. By March, inflation rose to a two-year high of 4.1 percent, forcing the Bangko Sentral ng Pilipinas to reluctantly raise key policy rates to contain inflation.
With high oil prices and rising interest rates, the Philippine peso has lost its stability.
According to an interesting research paper by the Nigerian Journal of Sustainability Research titled “The Philippine Peso in Freefall: How the Iran War Is Crushing the Philippines’ Currency and Economy,” the Philippine peso is in the middle of one of the most severe crises in its modern history. In a matter of weeks, a currency that showed signs of stability at the start of 2026 has plunged to successive all-time lows, inflation has more than doubled, fuel prices have broken records and the economy — already bruised by a domestic corruption scandal — has been brought to its knees by a war unfolding thousands of kilometers away. What is happening to the peso right now is not just a currency story. It is the story of a nation of 117 million people caught in the economic crossfire of the 2026 US-Iran war, and of Asia’s most exposed economy learning exactly how brutal that exposure can be.”
The NJSR paper notes that the peso-dollar exchange rate stood at a relatively stable P57.6 to the dollar as recently as Feb. 28, 2026 — the day the US launched airstrikes on Iran. “Within weeks, that number had collapsed. By March 30, the peso had already hit record lows. By April 28, it breached the P61 level for the first time in history, closing at P61.30. By May 14, it had fallen further still to a new record close of P61.64 per dollar — the ninth time since the global oil shortage began that the currency had notched a fresh all-time low. On May 15, the rate sat at P61.64, representing a 2.74 percent decline over just one month and a staggering 10.40 percent drop over the past 12 months.”
The NJSR paper points out that the Philippine “peso’s fall has made it the worst-performing emerging-market currency against the dollar since the Iran war began, according to Bloomberg — trailing even the Indian rupee, which has faced its own severe pressures. The scale of the collapse is without modern precedent for the Philippine currency.”
To understand why the peso has suffered more than almost any other currency in Asia, the NJSR paper explained what makes the Philippines uniquely exposed to a Middle East oil crisis. It cited that “the Philippines imports virtually all of its crude oil — and the overwhelming majority of those imports come directly from the Middle East, routed through the Strait of Hormuz. When Iran closed the Strait on March 4, 2026, triggering what the International Energy Agency has called the ‘greatest global energy security challenge in history,’ the Philippines was immediately and acutely exposed in ways that more energy-diversified economies were not.
“Unlike Thailand or Vietnam, which have some domestic energy production or diversified import relationships, the Philippines has no meaningful alternative. Its transportation system runs almost entirely on imported oil. Its agriculture depends on imported fertilizers, largely derived from the same disrupted supply chains. Its power generation in many regions is oil-linked. When Brent crude surged past $120 per barrel and diesel prices in the Philippines hit around P120 per liter in mid-April — up by 38.6 percent in a matter of weeks — every sector of the economy felt it simultaneously. The government declared a state of national energy emergency on March 24, suspended excise taxes on kerosene and LPG, and implemented mandated price cuts on gasoline and diesel, but the underlying supply shock was too large and too fast for policy to fully absorb.”
To be continued
Now the pain begins (First of two parts)
Business Snippets
Marianne
By next week, the US-Iran war, triggered by the joint US and Israel attack on Tehran on Feb. 28, will officially have reached three devastating months for the global economy. This war has upended the energy, trade, travel and logistics sectors, among others hardest hit, and currently has no clear timeline for resolution.
The sectors that were immediately affected when the US and Israel attacked Iran were the travel and tourism sector, resulting in disruption in global travel resulting from the rerouting of air traffic from the vital Middle East hub that has been connecting Asia to Europe.
Overnight, the global tourism outlook dimmed following reports that Iran’s immediate retaliation targeted its GCC (Gulf Cooperation Countries) neighbors.
With the vital Middle East travel hub under attack, airline rerouting and avoidance of the region was immediate and air travel costs were the first to shoot up.
Analysts were initially hopeful and optimistic that the US-Iran conflict would be limited and that the negative economic effect would only affect this year’s performance.
However, once it became clear that the US-Israel attack on Iran would not be a short, definitive move that easily subjugated Iran, similar to what happened in Venezuela, global oil prices began to shoot up, finally sending global ripples of pain, especially for countries heavily reliant on imported crude oil.
Iran, in fact, showed the world that it could cause more global economic pain through its control of the vital Strait of Hormuz and effectively choke vital supplies of crude oil and liquefied natural gas, as well as vital petrochemical and fertilizer supplies.
Most unfortunately, it showed that the global alliance once nurtured by the US has fractured and can no longer collectively and effectively resolve the economic malaise now gripping the entire world.
For us Filipinos, the first impact was on local gas and diesel prices, rising by around 30 percent and thus impacting the transport cost of vital goods, products and services. By March, inflation rose to a two-year high of 4.1 percent, forcing the Bangko Sentral ng Pilipinas to reluctantly raise key policy rates to contain inflation.
With high oil prices and rising interest rates, the Philippine peso has lost its stability.
According to an interesting research paper by the Nigerian Journal of Sustainability Research titled “The Philippine Peso in Freefall: How the Iran War Is Crushing the Philippines’ Currency and Economy,” the Philippine peso is in the middle of one of the most severe crises in its modern history. In a matter of weeks, a currency that showed signs of stability at the start of 2026 has plunged to successive all-time lows, inflation has more than doubled, fuel prices have broken records and the economy — already bruised by a domestic corruption scandal — has been brought to its knees by a war unfolding thousands of kilometers away. What is happening to the peso right now is not just a currency story. It is the story of a nation of 117 million people caught in the economic crossfire of the 2026 US-Iran war, and of Asia’s most exposed economy learning exactly how brutal that exposure can be.”
The NJSR paper notes that the peso-dollar exchange rate stood at a relatively stable P57.6 to the dollar as recently as Feb. 28, 2026 — the day the US launched airstrikes on Iran. “Within weeks, that number had collapsed. By March 30, the peso had already hit record lows. By April 28, it breached the P61 level for the first time in history, closing at P61.30. By May 14, it had fallen further still to a new record close of P61.64 per dollar — the ninth time since the global oil shortage began that the currency had notched a fresh all-time low. On May 15, the rate sat at P61.64, representing a 2.74 percent decline over just one month and a staggering 10.40 percent drop over the past 12 months.”
The NJSR paper points out that the Philippine “peso’s fall has made it the worst-performing emerging-market currency against the dollar since the Iran war began, according to Bloomberg — trailing even the Indian rupee, which has faced its own severe pressures. The scale of the collapse is without modern precedent for the Philippine currency.”
To understand why the peso has suffered more than almost any other currency in Asia, the NJSR paper explained what makes the Philippines uniquely exposed to a Middle East oil crisis. It cited that “the Philippines imports virtually all of its crude oil — and the overwhelming majority of those imports come directly from the Middle East, routed through the Strait of Hormuz. When Iran closed the Strait on March 4, 2026, triggering what the International Energy Agency has called the ‘greatest global energy security challenge in history,’ the Philippines was immediately and acutely exposed in ways that more energy-diversified economies were not.
“Unlike Thailand or Vietnam, which have some domestic energy production or diversified import relationships, the Philippines has no meaningful alternative. Its transportation system runs almost entirely on imported oil. Its agriculture depends on imported fertilizers, largely derived from the same disrupted supply chains. Its power generation in many regions is oil-linked. When Brent crude surged past $120 per barrel and diesel prices in the Philippines hit around P120 per liter in mid-April — up by 38.6 percent in a matter of weeks — every sector of the economy felt it simultaneously. The government declared a state of national energy emergency on March 24, suspended excise taxes on kerosene and LPG, and implemented mandated price cuts on gasoline and diesel, but the underlying supply shock was too large and too fast for policy to fully absorb.”
To be continued