The Philippines: unpacking the hit from the Iran war

The state of emergency now in place in the Philippines gives the government powers to address the most acute strains in access to essential inputs, but it won’t prevent an economic shock. The central bank looked through the jump in local fuel prices and put more emphasis on the hit to activity when it left interest rates unchanged at an off-cycle meeting today. We think global energy prices would have to rise a lot further, and severe balance of payments strains to emerge, before interest rates were hiked.