The World Bank lowered its economic growth forecasts for the Philippines through 2027, citing persistent governance concerns and weather-related disruptions despite a boost from artificial intelligence-driven exports.
In its January 2026 Global Economic Prospects report, the Washington-based lender said it expects the Philippine gross domestic product to expand by 5.1 percent in 2025, 5.3 percent in 2026 and 5.4 percent in 2027. These figures represent downward revisions from previous estimates of 5.3 percent for 2025, 5.4 percent for 2026 and 5.5 percent for 2027.
World Bank officials said that while planned structural reforms are expected to improve productivity and investment, the outlook is clouded by institutional challenges.
“In the Philippines, planned structural reforms are likely to boost investment and productivity, but concerns around governance remain,” the World Bank said.
The report said the economy faced setbacks from a contraction in public investment and frequent climate shocks.
However, the industrial sector remained a bright spot. Industrial production increased in the Philippines, Malaysia and Vietnam, spurred by global demand for semiconductors required for artificial intelligence (AI) applications.
On a global scale, the economy has shown resilience against trade tensions and policy uncertainty. Last year, activity was supported by a surge in AI spending, strong risk appetite and the stockpiling of traded goods as firms adapted to rising barriers.
This recovery from the 2020 recession has been the strongest in more than 60 years, but the World Bank warned of a sharp divergence between nations.
While 90 percent of advanced economies have surpassed pre-pandemic per capita income levels, more than 25 percent of emerging markets and developing economies remain below 2019 levels.
Global growth is projected to slow to 2.6 percent this year as temporary supports fade. The World Bank expects trade growth to weaken as companies reduce inventory accumulation and the effects of tariffs intensify.
Near-term risks remain tilted to the downside, with growth potentially faltering if trade tensions escalate further or financial market sentiment deteriorates. Growth could be supported if AI-related activity broadens or if firms prove highly adaptable to new trade conditions, it said.
The report said global efforts are necessary to ease financing constraints, improve the trade environment and mitigate climate risks to ensure a more equitable recovery.
