THE World Bank has lowered its economic growth forecast for the Philippines for 2025 to 5.1 percent, saying the country is feeling the impact of slower business investment, weaker tourism and delays in public projects linked to governance issues.
The new estimate is slightly below the Bank’s June projection of 5.3 percent and weaker than the 5.9 percent growth seen in 2024. The economy is expected to recover only gradually, reaching 5.3 percent in 2026 and 5.4 percent in 2027.
“We revised the forecast downward because the momentum of the economy has softened, especially on the investment side,” World Bank senior economist Jaffar Al-Rikabi said, in a briefing streamed online on Tuesday, Dec. 9, 2025. Domestic challenges weighed on growth this year and a weaker global environment will add pressure in the coming years.”
Why growth slowed this year
The Philippine economy grew by five percent from January to September — slower than expected. Businesses held off on expansion and construction activities were disrupted by the midterm election period and ongoing governance reviews.
Tourism, a key source of jobs and income, continued to lag. Visitor arrivals from major markets such as South Korea and China have not returned to pre-pandemic strength.
Consumer spending also slipped in the third quarter as a series of typhoons and floods hit the country, affecting household budgets.
Global risks ahead
While the world economy showed surprising strength earlier this year, the World Bank expects major economies such as the United States, China and Japan to cool beginning 2026. Slower global growth would make it tougher for Philippine exporters and manufacturers to sell goods abroad.
Al-Rikabi warned that financial markets could also become unstable if global tech investments fail to deliver expected returns. “A sharp correction in global markets could trigger capital outflows from emerging economies, including the Philippines,” he said.
Some strengths remain, but challenges persist
Inflation has averaged 1.7 percent, giving the Bangko Sentral ng Pilipinas room to cut interest rates and support borrowing. Job numbers remain relatively strong.
But the government’s fiscal deficit widened this year as one-off revenues subsided. Spending also shifted toward day-to-day operations rather than long-term infrastructure, which the Bank said is essential for sustaining growth.
Reforms needed to boost confidence
The World Bank said that governance concerns, delays in project implementation and slow progress in business reforms continue to discourage investors. Climate risks — such as more frequent storms and flooding — also threaten food supply and household spending.
Even so, the Bank noted potential upsides: a stronger tourism rebound, new trade agreements and productivity gains from technological innovation.
“To restore confidence and unlock faster growth, the Philippines needs to accelerate governance and structural reforms,” Al-Rikabi said. / KOC