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The Makati-Taguig skyline in this photo taken on April 12, 2024.   Gigie Cruz, ABS-CBN News

Article (news)

PH ECONOMY

Jekki Pascual

ABS-CBN News

MANILA -- The World Bank has trimmed its growth forecast for the Philippines this year until 2027 largely due to domestic shocks including disasters and the flood control corruption issue.World Bank Senior Economist Jaffar Al-Rikabi said the Philippines may grow 5.1 percent this year, lower than the 5.3 percent previously forecast and lower also than the government’s target of 5.5 to 6.5 percent. The global lending firm added that for 2026 the Philippines may slightly recover growing 5.3 percent, and 5.4 percent in 2027.He said this growth is still considered robust, but is slower than the initial target. The slowdown is driven by lower domestic investment, weak business confidence, decline in foreign direct investment, and the domestic shocks which also impacted consumption.“Softer construction activity and softer manufacturing activity driving slower growth in the industry. We have, for example, a 1.5 month ban on public works in Q2 around the midterm elections. And in Q3, of course, we have the ongoing scrutiny of public infrastructure projects that slowed down public investments and has had an impact on private investments,” Al-Rikabi said.He added, “Private consumption has decelerated or we expect it to decelerate overall in 2025. This is largely, we think, due to the impact of higher than expected levels of natural disasters.”Growth is expected to recover next year because of the country’s strong fundamentals. The World Bank said inflation is easing, employment remains robust, and policy rates are also easing. Exports may be impacted in the next two years due to global uncertainties. Which is why they said it’s good to seek free trade agreements with many countries, which the Philippines is already doing.“The strategy there is to diversify. And in this respect the government of the Philippines has been embarked on a number of trade policy decisions that go in that direction,” said Gonzalo Varela, WB Lead Economist.But overall World Bank officials said the Philippines must continue to implement reforms in government to ensure corruption is minimize and to make business processes more convenient.“From the World Bank perspective, corruption is unacceptable… Take the opportune to increase transparency, increase institutional capacity, and modernize system,” said Zafer Mustafaoglu, WB Division Director.With the trimmed forecasts, they however said that the Philippines can still become an upper middle income country. This may however be delayed to 2028.“If you look at GNI per capita, GDP per capita growth forecast that we have for this year, next year, and the following year, this would put the Philippines in upper middle income status,” Al-Rikabi said.He added, “Officially, we don’t declare a country has been classified into UMIC until it had at least 3 years of consistent GDP per capita, GNI per capita above the UMIC threshold.”Previously government officials expected the country to hit upper middle income status by 2025, then it was moved to 2026, 2027 and the World Bank now said it may happen officially in 2028.

The Philippines may grow 5.1 percent this year, lower than the 5.3 percent previously forecast and lower also than the government’s target of 5.5 to 6.5 percent.

The Philippines may grow 5.1 percent this year, lower than the 5.3 percent previously forecast and lower also than the government’s target of 5.5 to 6.5 percent.

World Bank trims Philippine growth forecast; says upper middle income status in 2028

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World Bank trims Philippine growth forecast; says upper middle income status in 2028

Jekki Pascual,

ABS-CBN News

Published December 10, 2025 10:57 AM PHT

Read More:

world bank

philippine economy

flood control

upper middle income country

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