World Bank retains Philippines growth forecasts

Flags vulnerability to oil shocks

MANILA, Philippines — The World Bank has kept its growth forecasts for the Philippines through 2028, flagging the country’s high vulnerability to global fuel shocks relative to its neighbors.

Its East Asia and Pacific Economic Update for October 2026 report showed that the multilateral lender expects the Philippines to grow by 3.7 percent this year, unchanged from the forecast it provided in August.

If realized, Philippine economic growth this year would be slower than the previous year’s 4.4 percent, but fall within the government’s 3.5 to 4.5 percent growth target.

For 2027, the World Bank also maintained the 5.2 percent growth forecast it provided in August.

For 2028, the World Bank also left its growth projection unchanged at 5.5 percent.

Both the 2027 and 2028 growth forecasts are within the government’s annual growth goal of five to six percent for those years.

World Bank chief economist for Asia Franziska Lieselotte Ohnsorge said in a briefing yesterday that the Philippine growth forecast was maintained based on the country’s exposure to two global trends: headwinds from high energy prices and tailwinds from global artificial intelligence (AI)-related activity.

On high fuel prices, she said the Philippines is more exposed than others in the region.

“The Philippines is the outlier in East Asia. It is struggling more than others with high energy prices. It has high net energy imports. It has been hurt more by the global increase in energy prices,” she said.

She said the Philippines is also unable to gain much from the global AI boom.

“It is less integrated in these global AI-related value chains than countries like Vietnam and Malaysia are. So it’s not benefiting from these global tailwinds, but it’s really being hurt by the global headwinds and that has sort of set back growth more,” she said.

As high energy prices push Philippine inflation to 5.8 percent this year, the World Bank expects consumption to weaken and production costs to rise.

It said weak public investment and confidence this year are likewise expected to soften investment growth.

For 2027 to 2028, the World Bank said the Philippines’ growth hinges on a public investment rebound and inflation normalization.

Latest data from the Philippine Statistics Authority showed that inflation quickened to 7.2 percent in September after easing for four straight months.

This brought average inflation from January to September to 5.4 percent, above the government’s two to four percent target band.

Meanwhile, second-quarter economic growth was 2.3 percent, the slowest in five years.

Average growth in the first half was at 2.6 percent, below the government’s 3.5 to 4.5 percent target for the year.