At A Glance
- Malaysia-based Maybank expects the Bangko Sentral ng Pilipinas (BSP) to raise the key borrowing costs by a quarter of a point, citing the Philippines' high vulnerability to oil price surges due to its high dependence on oil sourced from the Persian Gulf of the Middle East.
Malaysia-based Maybank expects the Bangko Sentral ng Pilipinas (BSP) to raise key borrowing costs by a quarter of a point, citing the Philippines’ high vulnerability to oil price surges due to its heavy dependence on oil sourced from the Persian Gulf in the Middle East.
Maybank analysts wrote in a commentary published last Friday, March 20, that the Philippines emerged as the “most vulnerable” economy likely to bear the serious brunt of the mounting military tensions between United States (US)-backed Israel and Iran.
This risk exposure comes as 95 percent of the Philippines’ crude oil imports are sourced from Persian Gulf supplier countries. Maybank further noted that the country is nearly fully dependent on imported oil to meet its needs.
Vietnam’s vulnerability follows, with 88 percent of its crude imports sourced from the Middle East.
Estimates by the foreign lender indicate that Philippine consumer prices will sustain the gravest injury, or “highest inflationary impact,” in a scenario where crude oil costs maintain a 10-percent increase amid the ongoing geopolitical conflict.
Maybank, in particular, priced in nearly half a percentage point (ppt) increase in inflation under this condition.
Analysts of the lender have tweaked their 2026 assumptions for Association of Southeast Asian Nations (ASEAN) economies, with larger adjustments for the Philippines. They now expect 2026 inflation to come in higher at 3.3 percent from 2.8 percent previously, while the forecast for 2027 was lowered to 3.1 percent from 3.3 percent earlier.
Recall that the BSP has stayed firm in its position that an intervention through monetary policy adjustment would only occur should the environment threaten a spike in inflation.
Economic growth, measured by gross domestic product (GDP), also factors into the monetary authorities’ policy decisions. Recent policy moves have taken into account the economic growth slump in the second half of 2025, coupled with still-benign price pressures.
Maybank said it has lowered its assumptions for ASEAN-6 GDP growth to 4.5 percent from 4.8 percent in 2026, and to 4.7 percent from 4.8 percent in 2027. Larger downward revisions include the Philippines, Vietnam, and Thailand.
For the Philippines alone, Maybank has reduced its forecast from 4.9 percent to 4.5 percent for 2026, and from 5.2 percent to 4.9 percent for 2027. These revisions still cite the Philippines’ sensitivity to energy shocks.
That said, Maybank said it anticipates the BSP will hike the benchmark rate by 25 basis points (bps) from the current 4.25 percent. As for the timing, the lender’s analysts expect this move to happen in the second quarter of the year.
This would reverse the reduction made in the latest policy meeting in February, bringing the key rate to 4.5 percent, still 200 bps lower than the peak seen in 2024. Maybank expects this forecast rate to remain unchanged through 2027.
Germany-headquartered Deutsche Bank has also warned that soaring oil prices could halt the BSP’s easing cycle. “Within Asia, as we warned earlier, rising oil prices point to no further rate cuts by Bank Indonesia (BI) and the BSP, with the latter potentially hiking as early as April,” Deutsche Bank Research said in a March 23 report.