THE LOGISTICS industry should prepare for a stronger Philippine economic recovery in 2027 as the expected resumption of infrastructure spending could drive demand across transportation, warehousing and other supply-chain services, economist Prof. Ronilo Balbieran said.
Speaking at the Logistics Conference hosted by the Mandaue Chamber of Commerce and Industry on Thursday, Sept. 24, 2026, Balbieran said the country’s current economic slowdown is largely cyclical and linked to infrastructure underspending, rather than a structural weakness in the economy.
He attributed roughly 90 percent of the current economic weakness to the infrastructure spending slowdown, rather than high oil prices. He said government infrastructure spending had been below target for several quarters, affecting construction and, in turn, demand and income across the economy.
“The economic slowdown it’s not because of (high) oil prices. It’s because of the negative 30 to negative 40 percent government underspending on infrastructure,” he said. “We have been underspending by Covid-19 pandemic proportions for four quarters.”
Great recovery
Balbieran described 2026 as a difficult year within a longer period of economic expansion but he urged businesses to prepare for what he called the “Great Recovery of 2027.”
Balbieran pointed to forecasts from major multilateral institutions that place Philippine economic growth in the range of about 5.2 percent to 5.5 percent in 2027.
“The second quarter 2026 gross domestic product grew 2.3 percent - the weakest quarter since 2009 outside the pandemic. Two shocks did it: an oil price spike from the Middle East war, and a corruption clean-up that froze public construction. Government construction fell 32.4 percent, but on its way to recover. The only debate is how higher is the recovery next year,” he said.
Infra spending critical
Balbieran said infrastructure spending is critical to the recovery because construction activity generates demand across a wide range of industries.
Infrastructure accounts for a significant share of economic activity, while construction spending has spillover effects on transportation, materials, employment, household income and consumption, he said.
The current slowdown has been aggravated by government underspending on infrastructure, Balbieran said, with delayed projects weighing on construction activity and related industries.
A pickup in infrastructure expenditure would therefore have a multiplier effect, particularly for logistics companies that transport construction materials, equipment and other goods.
“Once construction moves, transportation moves,” he said, stressing the close relationship between infrastructure activity and logistics demand.
Opportunity for logistics
The expected recovery presents an opportunity for logistics companies to prepare capacity ahead of the increase in demand, rather than wait until economic activity has already accelerated.
Balbieran urged logistics businesses to use the remaining months of 2026 to accelerate technology adoption.
He said the sector should focus on digitalization, technology adoption and workforce development as it prepares for the next growth cycle.
He said logistics remains among the less digitized sectors of the Philippine economy, leaving room for businesses to improve productivity through automation and better use of technology.
He said the industry should also anticipate changes in supply chains as e-commerce, digital platforms and new distribution models reshape the movement of goods.
The economist also highlighted the potential of regional economies to contribute more to national growth, particularly as infrastructure improves connectivity outside Metro Manila.
Cebu, he said, is well positioned to benefit from the country’s next phase of expansion because of its central location and established role as a regional business and logistics hub.
The greater dispersal of economic activity could create additional demand for transportation, warehousing and other logistics services in regional centers, he said.
Meanwhile, MCCI president Barbara “Bambi” Gothong-Tan said the annual logistics conference has become a venue for the business community to examine challenges affecting logistics and supply chains and identify ways to address them collectively.
“This is why we continue to create opportunities for this industry to come together,” she said.
The conference, now on its third edition led by MCCI’s immediate past president Mark Anthony Ynoc, forms part of chamber’s annual business month activities.
Gothong-Tan said while discussions in previous conferences had addressed several industry concerns, new challenges continue to emerge while some long-standing issues remain unresolved.
“These concerns are better understood and addressed when we talk about them together,” she said.
Gothong-Tan said continued dialogue among stakeholders would be important as businesses navigate changes in the logistics and supply chain environment. / KOC