Impact of the Middle East Crisis on the Philippine Economy

chaos on a street in Libya

The Philippine economy might be threatened, like the rest of the world, by the ongoing political turmoil in the Middle East and North Africa. Most of these counties are major oil-producers.  They are responsible for 36% of global oil output and 61% of proved reserved in 2009 according to Statistical Review of World Energy by BPI PIc. Saudi Arabia, the largest world’s oil producer, holds one-fifth of the world’s oil. Iran, with an output of 37.2 million barrels per day, is OPEC’s second largest, while Libya is 8th with an output of 1.6 million barrels per day. As of yesterday news of the escalation of violence in Libya sent the oil price soaring above $105 per barrel.  It could trigger a cascade of price increases on various commodities and services making life more difficult for the average Filipinos.

The future of the Filipino Overseas Workers or OFWs hangs in the balance as a consequence of the tension in this region.  Due to the lack of better opportunities at home many Filipinos are forced to work temporarily or permanently abroad. Middle East is a prime destination for our skilled and unskilled workers.  According to POEA reports in 2008 alone 631, 828 Filipinos were deployed in this part of Asia. As of June 2010 there are around 6,000 Filipinos in Egypt, 31,000 in Bahrain, 1,400 in Yemen and around 26,000 are in Libya

Because of the large number of Filipinos working out of the country, remittances from them became the major pillar of the Philippine economy, contributing to more than 10% of the country’s gross domestic product. In 2010 total OFW remittance has reached US$18.8 billion. Remittances are money sent home to support the families they left behind in the Philippines. Here is the breakdown of Middle East OFW remittances based on Bangko Sentral ng Pilipinas data for the year 2010 (in thousand dollars):

Middle East____________2,964,341
Saudi Arabia___________1,544,34
 Bahrain______________   157,232
  Kuwait________________ 106,486
 Oman__________________  5,760
 Jordan_________________   3,175
 Libya__________________   1,045
 Egypt___________________   381
 Iraq____________________    292
  Iran____________________    160
    Yemen___________________    61

The United States and countries of the European Union have already advised their citizens to get out of the danger zone due to unrelenting violence and mayhem in Libya. Some have already started sending chartered planes and ferries to fetch their nationals.  Meanwhile, our Department of Foreign Affairs are still on a waiting game not having declared an emergency evacuation of Filipino workers yet. Only a travel ban to Bahrain, Libya and Yemen was issued so far. was issued. But it would be inevitable as the situation turns more perilous. However, it could mean loss of job for each individual worker and loss of revenue for the country as well.

Manuel Villar, chairman of the Senate trade committee, has called on the trade, energy and labor departments to come up with a comprehensive study and concrete proposals on how an escalation of hostilities between protesters and government forces in these countries could impact on the national economy and the welfare of OFWs.

The Management Association of the Philippines (MAP) said that the Philippines must be prepared in case there will be a recurrence of the 1973 oil crisis, and should reduce dependence on fossil fuel.

“Better prepared than sorry when the unwanted scenarios happen”, said the MAP.

2 Response to Impact of the Middle East Crisis on the Philippine Economy

February 28, 2011 at 2:48 PM

Not a nice news for the entire world about this crisis in Libya. Am not so into politics but for sure totally agree with the quotation
“Better prepared than sorry when the unwanted scenarios happen” . Country leaders should take their citizens life seriously which includes urgent safety.
Good job friend. I hope your people get rescued. we all hope the crisis ends for good.

March 1, 2011 at 12:21 PM

Likewise, I'm not so into politics myself. But sometimes as ordinary individuals we cannot avoid to share our views on certain issues. People nowadays are not afraid on airing their opinions, hence the popularity of twitter. We need to have our voice heard too. I also hope that everybody, our folks and the other nationals, will be rescued in time and no one gets hurt. I hope this crisis ends soon. Oil price just keeps on going higher.

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