World Bank still sees Philippine growth slowing to 3.7% this year

By Justine Irish D. Tabile, Senior Reporter

Philippine economic growth is expected to slow to 3.7% this year, unchanged from the World Bank’s April forecast, even as the lender upgraded its outlook for several of the country’s regional peers amid stronger artificial intelligence (AI)-related investment and exports.

In its October East Asia and Pacific Economic Update, the World Bank said Philippine gross domestic product (GDP) growth this year is likely to ease from 4.4% in 2025.

“Growth in the Philippines is projected to slow to 3.7% in 2026 as weakness in domestic demand widens the negative output gap,” the bank said.

“Pressure from high energy prices is forecast to push inflation to 5.8% in 2026, weakening household purchasing power and raising production costs, while weak public investment and confidence will soften investment growth,” it added.

If realized, the 3.7% growth would be near the lower end of the government’s 3.5%-4.5% growth target for 2026.

The Philippine economy grew by 2.6% in the first half, well below the government’s target for the year.

For 2027, the World Bank cut its growth forecast for the Philippines to 5.2% from 5.6% in April, while projecting a 5.5% expansion in 2028.

The 2026 and 2027 forecasts, however, were unchanged from the World Bank’s projections in its Philippine Economic Update released in August, before the release of second-quarter GDP data.

“Growth is forecast to increase to an average of 5.4% in 2027–28 contingent on the rebound of public investment and the expected normalization of inflation by 2027,” the World Bank said.

In contrast, the World Bank raised its 2026 growth forecast for East Asia and the Pacific by 0.3 percentage point to 4.5%, largely due to stronger high-tech investments and exports in economies participating in global AI value chains.