The outlook

The Iran war is anything but resolved. And it will look like that for maybe two years. The two-week ceasefire declared by Donald Trump was violated in its first 24 hours, indicating bad faith among the three major players – the United States, Iran and Israel.

Early Wednesday, 88 minutes before his self-imposed 48-hour deadline for Iran to reopen the Strait of Hormuz, otherwise he would annihilate Iran’s civilization of 8,000 years, never to be back again, Trump declared a two-week ceasefire and agreed to tackle Iran’s 10-point demand as a basis for negotiations. So Armageddon became an armistice. A shaky armistice.

In the event, Israel pummeled Lebanon with fury and 250 people died instantly. Saying Israel’s war in Lebanon is not part of the ceasefire agreement (it is, say the Iranians), Israel wanted to finish off the Hezbollah, a proxy terrorist group of Iran based in Beirut. Angered, Iran decided not to reopen the Strait of Hormuz, in violation of the ceasefire agreement.

Result: after slumping to below $100 a barrel, to $94, Brent oil is back to above $100, to $124 per barrel in spot price late Wednesday, for delivery in 10 to 30 days. Goldman Sachs predicts that, given the extended Hormuz closure scenario, Brent will average $120 in the third quarter, $115 in the fourth quarter, 2026:

Goldman’s updated oil price forecasts at a glance:

• Q2 Brent: $90/bbl (down from $99); Q2 WTI: $87/bbl (down from $91)

• Q3 Brent: $82/bbl (unchanged); Q3 WTI: $77/bbl (unchanged)

• Q4 base case Brent: $80/bbl; Q4 WTI: $75/bbl

• Q4 upside scenario: Brent at $115/bbl if ceasefire fails and ~2 million barrels per day production losses persist.

Extended Hormuz closure scenario: Brent $120 in Q3, $115 in Q4.

So Filipinos may have to accept life of higher oil prices and higher prices of anything or any service that uses oil as a source of electricity, fuel, gas, aviation fuel, diesel, gasoline, helium, naptha and other products.

Filipinos survived the first major oil shock, when oil prices quadrupled from $3 per barrel in October 1973 to $12 per barrel in March 1974 after the OPEC cartel imposed an embargo. Did you know how the Philippine economy performed a year after that? We registered an unheard of GDP growth rate in 1973 of 8.9 percent! In 1974, however, growth was halved to 3.9 percent. That was under Ferdinand Marcos Sr. after a year of declaring martial law.

The second oil shock came in 1979 after the Iranian Revolution that installed the present clique of Ayatollahs. Still in 1979, Philippine GDP growth rate was a good 5.8 percent, from 6.8 percent in 1978. Despite the slumps, the 1970s generally saw an average Philippine growth of over five percent. Today, a five percent growth indicates a booming economy.

This 2026, the oil shock could not be any worse than the 1973 and 1979 oil shocks. The Philippine ecosystem is far bigger, more broad-based and dynamic than it was in the 1970s.

The only problem is the corruption of our politicians, which has worsened considerably and does infinitely more damage than the oil shocks of 1973, 1979 and 2026 – combined.  Perhaps, we should load our rapacious politicians on the $30,000 Iranian drones to be pummeled by the $3-million to $10-million missiles of the US and Israel.

The civilization of our corrupt politicians should be eliminated from the face of the earth, never to be resurrected – ever.

Meanwhile, the Manila-based Asian Development Bank projects a Philippine economic growth of 4.4 percent in 2026, “slower growth than earlier expected due to rising global uncertainties, particularly from the Middle East conflict and downside risks.”

ADB’s Asian Development Outlook April 2026 says Philippine growth rises to 5.5 percent in 2027.

Growth will continue to be driven mainly by domestic demand, and with investment supported by the lagged effects of previous policy rate cuts. But the gains will be partly offset by the recent surge in price pressures, which will weigh on investment decisions and erode household spending, says ADB.

“The Philippine economy, with its heavy dependence on imported fuel, will face challenges from rising external risks,” said ADB Philippines Country Director Andrew Jeffries. “What the current global conditions underscore is the need for sustained reforms, especially in strengthening human capital, improving investment efficiency and the business environment and protecting vulnerable households to ensure the country emerges unscathed and in a better growth position after the external shocks subside.”

Inflation is projected to rise to 4.0 percent in 2026, largely due to high global commodity prices, before easing to 3.5 percent in 2027, according to the report. The government has rolled out targeted assistance programs, such as cash and fuel subsidies, to cushion the impact of the Middle East conflict on vulnerable sectors such as farmers, fisherfolk and public transport drivers. It has also sought to secure more oil supplies from non-Middle East sources.

Downside risks to growth have increased, mainly from the Middle East conflict, which could further heighten inflationary pressures. Severe weather events and delays in public investment also weigh on growth.

Says ADB: Private consumption is expected to grow moderately in 2026 as remittance inflows, which rose to $35.6 billion in 2025 or equivalent to 7.3 percent of GDP, are expected to be affected by the Middle East conflict. The Middle East accounts for over 17 percent of total remittances in the Philippines, and a prolonged conflict could affect overseas Filipino workers and household income. Remittances should recover once conditions in the region improve.

Investment is projected to recover gradually as public infrastructure spending rebounds under improved budget execution and enhanced project monitoring. The 2026 national budget prioritizes health, education, workforce upskilling, social protection, agriculture infrastructure and climate and disaster resilience.

The government’s infrastructure expenditure, along with expanded public-private partnerships and reforms allowing greater foreign investment in key sectors – such as telecommunications, shipping, railways and renewable energy – are expected to support medium-term growth, says ADB.

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