DESPITE external headwinds weighing on the Philippine economy, the World Bank said it expects economic growth to rebound above 5 percent next year as the impact of current global shocks eases.
World Bank Division Director for the Philippines, Malaysia, and Brunei Zafer Mustafaoglu on Thursday said the weaker growth outlook merely reflects a short-term slowdown brought about by external shocks and does not alter the country’s medium-term prospects.
The Washington-based lender in April lowered its 2026 gross domestic product (GDP) growth forecast for the Philippines to 3.7 percent from its earlier projection of 5.3 percent amid heightened global uncertainty.
‘When we look at for the next two years, our expectation is that economic growth will recover above 5 percent,’ he said in a televised interview.
Mustafaoglu said the World Bank remains confident the Philippine economy will regain momentum as current shocks are expected to ease.
He said the Philippines remains well-positioned for sustained growth given its young population, strategic location in Asia, and favorable long-term opportunities.
‘On average, we would expect around close to 5.5 percent growth after 2026, meaning 2027, 2028,’ he added.
If realized, the projected recovery would put the Philippines on track to meet the Development Budget Coordination Committee’s (DBCC) recalibrated 5- to 6-percent growth target for 2027 to 2030.
Mustafaoglu also emphasized that Manila’s partnership with the World Bank will not be affected despite the dimmed near-term outlook.
He noted that right now, the main focus of the bank is to help mitigate the impact of the geopolitical tensions and ensure that it will not further hurt vulnerable households.
Despite the current headwinds, Mustafaoglu also said the World Bank remains confident that the Philippines can meet the targets under its Country Partnership Framework (CPF).
Launched in 2025, the CPF serves as the World Bank’s six-year engagement strategy with the Philippines.
It aims to help create 4 million more and better jobs by improving the business environment and mobilizing private investment, while also expanding access to quality health care and education, strengthening social protection and climate resilience, improving broadband connectivity, and enhancing digital government services.
UMIC impact
Meanwhile, Mustafaoglu clarified that the Philippines’s graduation to upper middle-income country (Umic) status will not affect its access to World Bank financing.
He said the country’s new income classification will neither change the bank’s lending program nor its lending terms.
‘Moving to upper middle-income country does not affect our program or our lending to the country or lending rates to the country,’ he explained.
Mustafaoglu explained that World Bank lending generally tapers only after countries attain high-income status. Even then, he said, the institution continues to provide technical assistance and knowledge-sharing.
‘As the Philippines move forward, we will look at what are the basic needs of Philippines, where Philippines is growing better, but where maybe Philippines need more support, and we will adjust the program from that angle,’ he added.