The collapse of peace talks between the United States (US) and Iran over the weekend could hurt semiconductor manufacturers in Asia, including the Philippines, according to British banking giant Barclays.

“A prolonged energy disruption could lead to a tail-risk scenario that hits semiconductor output, costs, or both—turbulence in the [South] Korean or Taiwanese upstream would likely cascade quickly into the Southeast Asian downstream of the global semiconductor supply chain, including in Malaysia, Singapore, and the Philippines,” Asia-based Barclays economists Brian Tan, Bum Ki Son, Aastha Gudwani, and Amruta Ghare said in an April 13 report obtained by Manila Bulletin.

Manila Bulletin reported earlier that exporters are bracing for the impact of soaring jet fuel prices, especially on electronics—the country’s top export commodity, which is mostly transported by air to overseas markets.

In particular, Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI) president Danilo Lachica told Manila Bulletin last month that escalating conflict in the Middle East could disrupt cargo flights, threatening semiconductor exports that rely on just-in-time (JIT) delivery.

Export industry leaders warn that grounded planes could break global supply chains, halt overseas production, and lead to significant revenue losses.

Trade Secretary Cristina Roque told Manila Bulletin early this month that the country’s merchandise exports may post flat growth this year, slowing down after last year’s record-high performance, as the ongoing war drives up fuel costs and disrupts supply chains.

Based on Barclays’ latest assessment, emerging Asia, including the Philippines, “is unlikely to escape at least some lasting economic drags from persistent supply constraints,” as the bank cited recent news headlines pointing to limited visibility on a near-term resolution to the Middle East conflict, alongside mounting signs of strain in global energy supplies.

“We think the economic scarring from the attacks on energy facilities and ports in Iran and other Gulf nations could continue to keep supply under stress in emerging Asia,” Barclays said.

As such, Barclays maintained that the Bangko Sentral ng Pilipinas (BSP) “is likely to stay on hold when it releases its policy statement on April 23.”

“It is unclear if the [US-Iran] peace talks would have resulted in a resolution by then. Even if diplomacy succeeds, we doubt the central bank would be able to quickly shift back to rate cuts while the CPI [consumer price index] inflation reading—which surged to 4.1 percent year-on-year in March—remains in breach of the BSP’s two- to four-percent target range,” Barclays explained.

“Conversely, disappointment—implying higher global commodity prices for longer—may still not be enough to tilt the BSP into immediate rate hikes, given seeming resistance from the more dovish members of the Monetary Board (MB) to tighten in the off-cycle meeting held on March 26,” it added.

As Manila Bulletin reported last week, Barclays expects the BSP to keep key interest rates, including the 4.25-percent policy rate, steady at this month’s policy meeting before possibly hiking in June.

After an April pause and a 25-basis-point (bp) hike on June 18, Barclays sees two BSP rate cuts in early 2027.