Philippine growth seen picking up in second half — World Bank

By Justine Irish D. Tabile, Senior Reporter

PHILIPPINE ECONOMIC growth could pick up in the second half as public infrastructure spending accelerates and inflation eases, bringing the government’s full-year growth target within closer reach, a World Bank economist said.

World Bank Senior Country Economist for the Philippines Jaffar Al-Rikabi said growth could recover after a challenging first half, which was weighed down by the Middle East conflict and the lingering effects of a corruption scandal involving infrastructure projects.

The Philippine economy expanded by 2.6% in the first half, below the government’s 3.5%-4.5% growth target for the year.

Mr. Al-Rikabi noted that growth in the first half of 2025 had been robust, creating a high base for comparison this year.

“How does growth pick up? Well, growth picks up by public infrastructure gradually coming online,” he said during a panel discussion at the 12^th Annual Public Policy Conference.

Mr. Al-Rikabi said the government plans to accelerate implementation of infrastructure projects by the fourth quarter.

However, managing inflation remains a challenge amid the Middle East conflict, he said, adding that continued moderation in price pressures could support private consumption.

“We did see some data towards the tail end of the first half of the year where inflation was beginning to moderate. Still high but was beginning to moderate. If that continues, then we should see private consumption probably picking up,” Mr. Al-Rikabi said.

Former Economy Secretary and University of the Philippines professor emeritus Solita Collás-Monsod said the economy would need to expand by about 4.4% in the second half to post 3.5% growth for the full year.

“We will achieve 3.5% growth. I cannot believe that we will not be able to grow by 4.4%… for the second half,” she said.

However, Ms. Monsod questioned why the country should be satisfied with 3.5% growth when the Philippine Development Plan (PDP) had higher targets.

The original PDP targeted economic growth of 6.5%-8% annually from 2024-2028. The midterm update lowered the target to 6%-7% for 2026 through 2028.

Beyond the near-term growth outlook, economists also pointed to institutional and investment constraints that could weigh on the country’s longer-term expansion.

Asian Development Bank Institute Dean and Chief Executive Officer Bambang Brodjonegoro said the Philippines, as a middle-income economy, should pay attention to development planning and strengthen policy consistency, legal certainty and governance to attract more foreign direct investment (FDI).

“I think those are the three priorities in order to attract more FDI coming to the Philippines or any other economy,” he said.

He also said Southeast Asian economies could tap more investment from within the region, noting that intra-ASEAN investment remains at only around 20%.

“The potential is still big, but somehow we overlook this potential,” he said.

Meanwhile, World Bank’s Mr. Al-Rikabi said the Philippines faces a gap between the quality of its business regulations and implementation, which raises the actual cost of doing business.

“So we want to reduce de facto costs for businesses by streamlining the procedures that firms go through to register,” he said.

Ms. Monsod likewise argued that corruption and the uncertainty it creates have discouraged foreign investment.

“It is the corruption in this country, the uncertainty that it brings about that prevents foreign direct investment from coming,” she said.

Asked what could be done over the next 12 months, Ms. Monsod said the anti-corruption drive should continue, adding that she would like to see Vice-President Sara Duterte-Carpio impeached.

“This is a personal opinion, I would like to see the Vice-President impeached and that will start the whole ball rolling, because if the Vice-President can be impeached so are the others,” she said.

“And if the impeachment stays, the people will be empowered… they will continue their anti-corruption drive. The anti-corruption drive must continue, if we can do that in the next 12 months, we’re on the way,” she added.

Former Economy Secretary and University of Asia and the Pacific Professor Emeritus Jesus P. Estanislao said the Philippines should also draw up a longer-term strategy to attract more domestic and foreign investment.

“The biggest problem that we have is that we are unable to attract investments, both domestic and foreign, because of corruption,” he said. “So in the next 12 months, what we need to do is address that.”

Mr. Estanislao said the Philippines needs a strategic program that includes strengthening human resources as technologies such as artificial intelligence reshape the economy.

“We can do many things, but we have to put our heads together and come up with a good strategy now, leading to five years, 10 years, then investments will come,” he said.