Central Visayas is facing mounting stagflation risks as inflation in the region continues to outpace the national average amid rising geopolitical tensions in the Middle East, according to economist Ser Percival Peña-Reyes.
Stagflation Warning
Peña-Reyes, senior research fellow at Ateneo de Manila University, said Central Visayas remains highly vulnerable to inflation shocks because of its geography and economic structure. The region heavily depends on imported fuel, inter-island shipping, tourism, and logistics.
"Central Visayas is highly inflation-sensitive," he said, warning that the region could face "stagflationary pressure" as global oil prices rise and economic growth slows.
"We are not there yet. I would like to reassure people, not yet, but the risk is mounting," said Peña-Reyes.
Stagflation occurs when inflation remains high while economic growth slows and unemployment rises.
Inflation Trends
Central Visayas' inflation rate accelerated to 5.6 percent in January from 3.8 percent in December 2025. Inflation further climbed to six percent in February and 7.4 percent in March before surging to 10.8 percent in April.
This brought the region's average inflation rate to 7.45 percent in the first four months of 2026, significantly higher than the national average of 3.9 percent during the same period.
The recent escalation of tensions in the Middle East — particularly involving Iran, Israel, and the United States — began on Feb. 28. Since then, the conflict has expanded to include attacks on oil and energy infrastructure, disruptions in the Strait of Hormuz, and rising global oil prices. A temporary ceasefire was announced on April 8.
Why Central Visayas is Inflation-Sensitive
The economist said the region's exposure to shipping and fuel costs amplifies the pass-through effects of global supply shocks.
"As an island-region economy dependent on imported fuel and inter-island logistics, shipping costs quickly affect food prices, electricity generation, tourism operations, and construction materials," Peña-Reyes said during his online presentation before the Regional Development Council 7.
He warned that escalating tensions in the Middle East could further raise freight and aviation costs, potentially dampening tourism demand and increasing food inflation, particularly among low-income households that spend a large share of their income on food. Cebu's role as a major maritime and aviation hub magnifies the impact of these shocks on the regional economy, he added.
Peña-Reyes also cited climate-related risks, including El Niño, typhoons, fishery stress, and water shortages, as additional threats that could worsen food inflation and poverty in the region.
He said Central Visayas' dependence on tourism, remittances, export manufacturing, and global trade flows leaves it vulnerable to external slowdowns and geopolitical disruptions.
To strengthen resilience, the economist urged policymakers to prioritize energy security, modernize logistics systems, diversify the economy beyond tourism and consumption-led growth, and improve food and climate resilience.
"Diversification matters because economies that rely too heavily on tourism and consumption often struggle during external shocks," Peña-Reyes said.
He also emphasized the need to invest in digital services, advanced manufacturing, technical-vocational education, and infrastructure upgrades.
2026 Outlook
For the regional outlook, Peña-Reyes said Central Visayas could post four percent to five percent growth if Middle East tensions remain contained, although inflation may stay elevated and investment activity could become more selective.
"The region could still outperform many regions nationally but below its 2023-2024 boom pace," he said.
However, he warned that a worsening global crisis, including oil prices breaching $100 per barrel, could drag growth toward the low three-percent range due to weaker tourism, slower property demand, and rising business costs.
Despite the risks, he said the region could still achieve five percent to six percent growth under an upside scenario if oil prices stabilize, inflation eases, tourism remains resilient, and Cebu benefits from manufacturing diversification and infrastructure investments.
