philippine economy is projected to grow above 5% However, this year and in 2027 Governance concerns remain, the World Bank said.
The multilateral lender kept its growth forecast for the country through 2027 unchanged from its December estimate.
In its biennial Global Economic Outlook report, the bank said Philippine gross domestic product (GDP) is expected to grow by 5.3% in 2026 and 5.4% in 2027.
The World Bank's forecast was within the government's 5-6% GDP target range for this year, but below the 5.5-6.5% target for 2027.
“Planned structural reforms in the Philippines are likely to boost investment and productivity, but concerns remain over governance,” the World Bank said.
Corruption scandals over unusual flood control projects have curbed government spending, weakened business sentiment, and Household expenditure was affected.
However, the World Bank estimates that GDP growth could average 5.1% in 2025, down from its earlier estimate of 5.3%. This is also below the government's 5.5-6.5% target and actual 5.7% growth in 2024.
“More recently, weather-related disruptions slowed growth in the Philippines and led to a recession in Thailand due to reduced public investment as well as reduced tourism revenues,” the World Bank said.
Additionally, it noted that industrial output increased in Malaysia and Vietnam as well as the Philippines, largely due to artificial intelligence (AI)-driven demand for semiconductor exports.
third fastest growth
Meanwhile, the World Bank said the Philippines is expected to be the third fastest growing economy in East Asia and the Pacific by 2027.
Vietnam's growth rate this year is estimated at 6.3%, followed by Mongolia (5.6%).
The Philippines' 5.3% growth projection would put it ahead of Indonesia (5%), Samoa (4.4%), China (4.4%), Cambodia (4.3%), Malaysia (4.1%), and the Marshall Islands (4.1%).
For 2027, Vietnam is still poised to become the fastest growing economy at 6.7%, followed by Mongolia (5.5%), Philippines (5.4%), Indonesia (5.2%), Cambodia (5.1%), China (4.2%), Malaysia (4%), and Laos (3.9%).
The Philippines' GDP growth forecast also puts it above the region's average growth projection of 4.4% for 2026 and 4.3% in 2027.
The World Bank said economic growth in the East Asia and Pacific (EaP) region is expected to remain slow, mainly due to the slowdown in China.
“Elsewhere in the EaP, activity is expected to slow this year before picking up pace next year. This reflects strong investment growth in some countries as well as an end to front-loading due to domestic policy support,” the bank said.
The World Bank also said risks to the regional outlook are tilted to the downside, noting that further increases in trade restrictions and policy uncertainty pose a significant risk to development in East Asia and the Pacific.
“Other downside risks include tighter global financial conditions, slower-than-expected growth in China, political uncertainty and social unrest in some economies, and natural disasters,” it said.
The multilateral bank also cited the drag from higher trade barriers as the private sector's adaptability and AI-driven expansion in investment and exports could boost growth prospects in the region as upside risks.
resilient global economy
Meanwhile, the global economy is proving more resilient than expected, with GDP growth in 2026 expected to improve slightly compared with last June's forecasts, with the World Bank warning that growth is too concentrated in advanced countries and too weak to reduce extreme poverty overall.
Its semi-annual Global Economic Outlook report showed that global output growth will slow slightly to 2.6% this year from 2.7% in 2025 and return to 2.7% in 2027.
The GDP forecast for 2026 is two-tenths of a percentage point higher than the last forecast released in June, while 2025 growth will be four-tenths of a percentage point higher than the previous forecast.
The World Bank said nearly two-thirds of the increase reflected better-than-expected growth in the US despite tariff-driven trade disruptions. It predicts US GDP growth will reach 2.2% in 2026, compared with 2.1% in 2025 – two-tenths and half a percentage point higher, respectively, than the June forecast.
The World Bank said that while import growth was set to overcome tariffs in early 2025 that had capped US growth for that year, larger tax incentives would help growth in 2026, offsetting the pressure of tariffs on investment and consumption.
But if current forecasts prove correct, the 2020s will be the weakest decade for global growth since the 1960s and will do little to prevent stagnation and unemployment in emerging market and developing countries, the global lender said.
“With each passing year, the global economy has become less capable of generating growth and more resilient to policy uncertainty,” World Bank chief economist Indermit Gill said in a statement. “But economic dynamism and resilience cannot vary over the long term without fragmenting public finance and credit markets.”
Mr Gill said global gross domestic product (GDP) per capita in 2025 was 10% higher than on the eve of the Covid-19 pandemic – indicating the fastest recovery from a major crisis in the last 60 years. But he said many developing countries are being left behind, with a quarter of them struggling with lower per capita income than in 2019, especially the poorest countries.
Growth in emerging markets and developing economies will slow from 4.2% in 2025 to 4% in 2026, two-tenths and three-tenths of a percentage point higher, respectively, than the June forecast. But excluding China, growth through 2026 for this group will be 3.7%, unchanged from 2025, the World Bank said.
China's growth will slow to 4.4% in 2026 from 4.9%, but the forecast will increase by four-tenths of a percent from June due to fiscal stimulus and increased exports to non-US markets.
The World Bank said growth in the euro zone will slow from 1.4% in 2025 to 0.9% in 2026 due to US tariff pressures, but will pick up to 1.2% in 2027 due to increased European defense spending.
Japan's outlook for 2026 is almost identical, with growth slowing to 0.8% after 1.3% growth in 2025, a year that President Donald J. The US is aided by front-loading of exports to beat Trump's tariffs. But slowing consumption and investment in Japan will keep GDP growth unchanged at 0.8% through 2027, the World Bank said. — Aubrey Rose A. innocente with reuters