The Philippines has implemented more policy measures to counter the global oil shock than any other economy in Southeast Asia, according to a report by the Asian Development Bank (ADB).
The Manila-based multilateral lender’s latest brief showed the Philippines adopted 7 of 8 major policy categories identified across Asia and the Pacific, the highest count among developing Southeast Asian economies, which also include Vietnam, Indonesia, Malaysia, Cambodia, Thailand, Myanmar, Laos, Brunei Darussalam, and Timor-Leste.
The measures span fuel subsidies and excise tax cuts, price controls, demand-reduction actions, strategic reserve adjustments, targeted assistance for vulnerable sectors, supply-side actions, and other initiatives including price monitoring and exploring alternative trade routes.
The Philippines was the only Southeast Asian economy to appear in the supply-side actions category, alongside India.
The breadth of the response comes as the Philippines recorded one of the steepest fuel price increases in the region.
The ADB brief showed diesel prices in the country rose by nearly 120 percent and gasoline by nearly 60 percent between February 23 and April 20, ranking behind only Myanmar and Laos among Asia-Pacific economies.
The ADB brief, however, cautioned that the most widely adopted measures across the region—fuel subsidies, excise tax cuts, and price controls—carry significant drawbacks.
“Price controls, blanket subsidies, and tax cuts are not recommended due to their price-distorting effects, poor targeting, and high fiscal cost, which may be difficult to sustain if global oil and gas prices stay higher for longer,” the report said.
Instead, the ADB recommended that governments direct fiscal support toward vulnerable households rather than broad-based subsidies.
“Targeting fiscal support to vulnerable groups and lower-income households, as much as possible on a temporary basis, does not blur price signals and helps preserve fiscal space,” the brief stated, citing targeted cash transfers and energy bill rebates not linked to consumption volume as practical examples.
The oil shock stems from the ongoing Middle East conflict, which escalated on February 28, 2026, severely impairing transit through the Strait of Hormuz—a critical corridor for global oil and liquefied natural gas flows.
The ADB said damage to energy infrastructure, including LNG facilities in Qatar that could take 3 to 5 years to repair, points to disruptions that are “more persistent than anticipated.”
Under its new reference scenario, the lender projects growth in developing Asia and the Pacific to slow to 4.7 percent in 2026, with inflation rising to 5.2 percent.
For the Philippines specifically, the ADB has downgraded its 2026 GDP growth forecast to 4.4 percent while raising its inflation projection to 6.3 percent, reflecting the economy’s exposure to imported fuel and external price shocks.
The bank has separately recommended that central banks in the region “guard against premature tightening that could choke off growth,” noting that the energy shock is an exogenous supply-side disruption rather than a demand-driven inflation event.
