World Bank projects Philippine growth above 5% until 2027

THE PHILIPPINE ECONOMY is projected to grow above 5% this year and in 2027, although governance concerns remain, the World Bank said.

The multilateral lender kept its growth forecast for the country until 2027, unchanged from its December projection.

In its bi-annual Global Economic Prospects report, the bank said the Philippine gross domestic product (GDP) is expected to expand by 5.3% in 2026 and 5.4% in 2027.

The World Bank’s forecasts were within the government’s 5-6% GDP target range for this year but below the 5.5-6.5% target for 2027.

“In the Philippines, planned structural reforms are likely to boost investment and productivity, but concerns around governance remain,” the World Bank said.

A corruption scandal over anomalous flood control projects has curbed government spending, eroded business sentiment, and affected household spending.

However, the World Bank estimated that GDP growth may have averaged 5.1% in 2025, slower than its earlier estimate of 5.3%. This is also below the government’s 5.5-6.5% target and the actual 5.7% growth in 2024.

“More recently, weather-related disruptions dampened growth in the Philippines and a contraction in public investment as well as slowing tourism revenues led to a deceleration in Thailand,” the World Bank said.

In addition, it noted that industrial production rose in the Philippines, along with Malaysia and Vietnam, largely owing 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 the East Asia and the Pacific region until 2027.

Vietnam is projected to grow by 6.3% this year, 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 Marshall Islands (4.1%).

For 2027, Vietnam is still poised to be the fastest-growing economy with 6.7%, followed by Mongolia (5.5%), the Philippines (5.4%), Indonesia (5.2%), Cambodia (5.1%), China (4.2%), Malaysia (4%), and Laos (3.9%).

The Philippines’ GDP growth forecast would also put it above the region’s 4.4% average growth projection for 2026 and 4.3% in 2027.

The World Bank said the economic growth in the East Asia and the Pacific (EAP) region was projected to moderate mainly due to the deceleration in China.

“Elsewhere in EAP, activity is expected to moderate this year before picking up next year. This reflects the unwinding of front-loading, along with stronger investment growth in some countries, owing to domestic policy support,” the bank said.

The World Bank also said risks to the regional outlook remain tilted to the downside, noting that further escalation in trade restrictions and policy uncertainty pose a significant risk to East Asia and the Pacific’s growth.

“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 added.

The multilateral bank also cited a lower drag from a higher trade barrier as private sector adaptability and AI‑driven expansion in investment and exports could lift growth prospects in the region as upside risks.

RESILIENT GLOBAL ECONOMY
Meanwhile, the global economy is proving more resilient than expected, with 2026 GDP growth expected to improve slightly over forecasts from last June, the World Bank said while warning that growth is too concentrated in advanced countries and overall too weak to reduce extreme poverty.

Its semi-annual Global Economic Prospects report showed that global output growth will slow slightly to 2.6% this year from 2.7% in 2025 before edging back to 2.7% in 2027.

The 2026 GDP forecast is up two-tenths of a percentage point from the last predictions released in June, while 2025 growth will exceed the prior forecast by four-tenths of a percentage point.

The World Bank said about two-thirds of the upward revision reflects better-than-expected growth in the US despite tariff-driven trade disruptions. It predicts US GDP growth will reach 2.2% in 2026, compared to 2.1% in 2025 — up two-tenths and half a percentage point from the June forecasts, respectively.

After an import surge to beat tariffs early in 2025 held back US growth for that year, bigger tax incentives will aid growth in 2026, offset by the drag of tariffs on investment and consumption, the World Bank said.

But if the current forecasts hold, the 2020s are on track to be the weakest decade for global growth since the 1960s and too low to avert stagnation and joblessness 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 seemingly more resilient to policy uncertainty,” Indermit Gill, the World Bank’s chief economist, said in a statement. “But economic dynamism and resilience cannot diverge for long without fracturing public finance and credit markets.”

Mr. Gill added that global GDP per person in 2025 was 10% higher than on the eve of the COVID-19 pandemic — marking the fastest recovery from a major crisis in the past 60 years. But he said many developing countries are being left behind, with a quarter of them saddled with lower per-capita incomes than in 2019, particularly the poorest countries.

Growth in emerging markets and developing economies will slow to 4% in 2026 from 4.2% in 2025, up two-tenths and three-tenths of a percentage point from the June forecasts, respectively. But excluding China, the 2026 growth rate 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 forecasts are both up four-tenths of a percentage point from June due to fiscal stimulus and increased exports to non-US markets.

Growth in the euro zone is set to slow to 0.9% in 2026 from 1.4% in 2025 due to the drag from US tariffs but recover to 1.2% in 2027 due to increases in European defense spending, the World Bank said.

Japan’s outlook is much the same for 2026, with growth slowing to 0.8% after a rise of 1.3% in 2025, a year aided by the front-loading of exports to the US to beat President Donald J. Trump’s tariffs. But slower consumption and investment in Japan will keep GDP growth unchanged at 0.8% for 2027, the World Bank said. — Aubrey Rose A. Inosante with Reuters