Investors around the world exploded in jubilation on Monday on expectations that after more than 100 days since the…

Investors around the world exploded in jubilation on Monday on expectations that after more than 100 days since the latest turmoil erupted in the Middle East, the United States and Iran will finally sign on Friday a peace deal that will reopen the vital Strait of Hormuz and end the conflict that has rattled the global economy.

Local investors joined the party, causing the peso to rally back to the 60-level against the US dollar and stocks to surge by 6.14 percent on Monday to close at its best finish in more than three months on the promise of a conclusion to the global energy crisis and supply chain disruption.

The celebration, however, might be short-lived, not only because of lingering skepticism over whether the deal will endure as the finer details of the tentative agreement have yet to be finalized but also because of the bitter reality that considerable damage from the oil crisis has already been done to the Philippines.

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The United Nations Development Programme (UNDP) underscored in its latest policy brief that the immediate impact of the Middle East crisis could set back the Philippines’ human development progress by the equivalent of 0.01 to 0.05 years.

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‘Crisis path’

While the number may seem minuscule–equivalent to a mere three to 18 days–this was enough in UNDP’s estimation to put the Philippines on a “crisis path” to losing some of its hard-fought gains in all dimensions of human development: income, health, and education.

The UNDP also said that based on its studies, more than 35,000 Filipinos could fall below the lower middle-income poverty line of $4.20 [P252.77] a day, with informal workers, public transport drivers, smallholder farmers, young people entering a softening labor market and remittance-dependent households among the most exposed.

The Marcos administration must thus make it its priority to pull out all the stops to immediately prevent any lasting damage, with another eye trained toward fortifying the country’s defenses against the adverse effects of another crisis in the volatile Middle East.

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The Philippines has indeed felt the impact of the latest conflict in the Gulf more keenly than many other countries, mainly because it imports almost all of the petroleum products that it needs to power households and the economy, and the entire volume comes from the Middle East.

Highly vulnerable

This heavy dependence consequently makes the Philippines highly vulnerable to anything that happens in the region, which is also home to over a million overseas Filipino workers, thus one of the biggest sources of remittances.

Inflation, for example, sizzled past consensus estimates to a three-year high 7.2 percent in April, a direct result of the surge in the global oil prices following the closure of the Strait of Hormuz through which about a fifth of the world’s oil transits.

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The surge in crude oil prices to as high as $126 a barrel from around $80 prior to the conflict has, in turn, caused prices of almost everything else in the Philippines to surge, from electricity to meat, rice, fruits and vegetables, and transportation thus hurting Filipinos where it really hurts, their pockets.

That the poor has been dealt a bigger blow should give the Marcos administration even more urgency to double down on the measures that have already laid down to assist those who need them the most.

These include more accurate and timely distribution of benefits under the Pantawid Pamilyang Pilipino Program plus other measures that also cover the middle class, such as loan extensions offered by the Government Service Insurance System and a wide range of policy reforms to make it easier to do business being implemented by the Securities and Exchange Commission and the Bureau of Internal Revenue.

The Marcos administration should also continue on the path of pushing renewable energy sources to protect the Philippines from another crisis that may lurk just around the corner as the finer points of the peace deal have yet to be finalized.

Fragile peace

The consequences of failure are dire.

As the UNDP stressed, “If relief is delayed or poorly targeted, coping responses such as reduced meals, foregone health care and interrupted schooling can convert the crisis into lasting human development losses in capabilities.”

The government will do well to heed UNDP’s advice to reduce the country’s exposure to future pain, from increased investments in agriculture, renewable energy, plus easier financing and support for micro, small and medium scale enterprises.

Plans along these lines have already been formulated. It is now in the execution that the various government agencies with help from the private sector should deliver.

Indeed, it is incumbent upon the Marcos administration to implement short- and long-term measures to ease the burden on Filipinos, especially now that a window of opportunity has been opened by a fragile peace deal to bring down oil prices and ease inflationary pressures.

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Otherwise, a shock that is supposed to be temporary will have permanent consequences that the Philippines can ill afford to bear.