UNLIKE the US-China trade tiff, a prolonged US-Iran conflict would prove to be more challenging for the Philippines, according to the National Economic and Development Authority (Neda).
The planning agency’s comment was sought on Peterson Institute for International Economics Nonresident Senior Fellow Adnan Mazarei’s view that the US-Iran conflict may be receding but it could still spark a new crisis in the Middle East.
Socioeconomic Planning Secretary Ernesto M. Pernia told the BusinessMirror that a prolonged US-Iran conflict would require the government to prioritize the plight of millions of overseas Filipino workers (OFWs).
“The [presence of many] OFWs further complicates our challenge,” Pernia said. “[This involves] having to repatriate them, [facing the] reduction in remittances, and placing them [OFWs] in jobs.”
An increase in refugees and migrants is one of the spillover effects of a prolonged US-Iran conflict, according to Mazarei.
Data from the Philippine Statistics Authority (PSA) showed there were around 2.3 million OFWs in 2018—a number much less than the total figure usually cited of 10 million overseas Filipinos, because these are only the ones with contracts officially registered with government. Majority or 82.6 percent of them are working in Asia.
Of this number, around 54.9 percent are working in Western Asia. This is composed of the Saudi Arabia where 24.3 percent of OFWs are working and United Arab Emirates with 15.7 percent.
Countries, such as Kuwait; Qatar; and others including Bahrain, Israel, Lebanon and Jordan, account for 5.7 percent; 5.2 percent; and 4 percent, respectively.
Oil prices
Apart from refugees and migrants, Mazarei said a prolonged conflict could lead to volatile oil prices, threatening oil importers like the Philippines.
When asked if the national government is open to implementing a program similar to the Pantawid Pasada for those affected by higher oil prices, Pernia only replied, “vamos a ver [we’ll see].”
The last Middle East and North Africa crisis in 2011 slowed the country’s full year GDP growth to 3.7 percent. If it weren’t for the Mena crisis, Neda said the economy would have replicated its 2010 growth of 7.1 percent.
At the time, Neda estimated that the contraction in exports cost the Philippine economy around 2.2 percentage points, while underspending for public construction cost the economy around 0.7 percentage points; and underspending for other government expenditures cost 0.1 percentage points of GDP growth.
Further, the Neda said the collective impact of all the typhoons, including Bebeng, Juaning, Mina, Pedring, Quiel and Sendong amounted to 0.63 percent of GDP, or a loss of around 0.4 percentage points in the GDP growth rate.
If all these were included in the GDP and added to the actual 3.7 percent full year growth rate, the economy would have posted a growth of 7.1 percent in 2011.
Image credits: Amir Hesaminejad/ Tasnim News Agency via AP