he World Bank cut its 2027 growth forecast for the Philippines, describing the country as an ‘outlier’ in East Asia and the Pacific as war-driven pressures weigh on growth and the economy struggles to benefit from the global artificial intelligence (AI) boom.
In its East Asia and Pacific Update released Tuesday, the Washington-based institution kept its 3.7 percent growth forecast for the Philippines this year but cut its 2027 outlook by 0.4 percentage point to 5.2 percent.
If realized, growth this year would lag the World Bank’s 4.5 percent forecast for the broader East Asia and Pacific region. It would also fall short of the Marcos administration’s target of 3.5 percent to 4.5 percent.
The World Bank forecasts that the Philippines will grow by 5.2 percent next year, outpacing its 4.4 percent projection for the region.
The estimate would also put growth near the lower end of the government’s 5 percent to 6 percent target for 2027.
‘Pressure from high energy prices is forecast to push inflation to 5.8 percent in 2026, weakening household purchasing power and raising production costs, while weak public investment and confidence will soften investment growth,’ the bank said. It added that next year’s growth would depend on the pace of the rebound in government spending and an expected easing of inflation.
The revision made the World Bank the latest global institution to lower its outlook for the Philippines, a net energy importer exposed to the fallout from the conflict in the Middle East and facing a slowdown in government spending amid corruption concerns.
Last month, the Asian Development Bank lowered its 2026 gross domestic product (GDP) growth forecast for the Philippines to 3.3 percent from 3.8 percent, while the International Monetary Fund cut its forecast to 3.4 percent from 3.9 percent.
The domestic economy expanded by just 2.6 percent in the first half, as limited fiscal support allowed war-driven inflation to quickly feed through to consumers. Government spending has also weakened following a wide-ranging crackdown on anomalous flood control projects.
Meanwhile, the World Bank said some countries in the region have been able to weather the impact of the US-Iran conflict because the global AI boom has powered their export sectors.
‘The Philippines is the outlier in East Asia,’ said Franziska Ohnsorge, the World Bank’s chief economist for Asia. ‘The World Bank predicts that the Philippines will grow by 5.2 percent next year, exceeding its regional projection of 4.4 percent.’