Fifteen years from now, the Philippine economy could accelerate by 6.8 percent yearly if the country continues to improve regional connectivity, productivity, and resource allocation, the Washington-based World Bank stated.

According to the multilateral lender’s latest report on Philippine growth and employment, such efforts could also increase the country’s employment by seven percent, and lift wages by 12.9 percent by 2040.

To achieve this, the World Bank has recommended reforms based on existing problems. Despite the country’s efforts, gaps in the infrastructure and energy sectors are still flagged by the World Bank as needing improvements.

“Despite investments in connectivity infrastructure, transport costs remain high,” the World Bank said in the report released on Tuesday, July 15. It noted that rising prices in energy, telecoms, and logistics, along with climate risks, continue to weigh on growth and stability.

To address these, the World Bank recommended building better roads, internet, and disaster-ready systems, especially in “lagging” or less developed areas.

Apart from infrastructure, the World Bank also flagged that “low human capital, and gaps in STEM [science, technology, engineering, and mathematics] and digital skills hinder technology adoption.” These concerns become even more challenging due to factors such as talent misallocation, including the low participation of women in the workforce.

According to the World Bank, businesses should be encouraged to upskill workers so they can adapt to new technologies such as artificial intelligence (AI).

“It is not enough to create more jobs; we must also raise productivity and competitiveness, enable the diffusion of technologies across our various sectors, and increase our capacity to produce innovations,” Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio Baliscan said during the launch of the report.

“These efforts must be accompanied by stronger and sustained investments in human capital, driven by quality education and healthcare,” he added.

Another recommendation from the World Bank is enhancing competition “by streamlining business regulations, improving local governance, and reducing the cost of moving goods, services, ideas, capital, and people.”

Lastly, the World Bank said “more private investment” could support the growth of the country’s growth domestic product (GDP).

As such, the Philippines should “attract more private money, support innovation, and make it easier to use new technology,” adding that to bolster productivity, the country should build stronger links between local and international firms.

In the first quarter of the year, GDP expanded by a modest 5.4 percent, slightly faster than the 5.3 percent in the previous quarter, but lower than the 5.7 percent in the same period in 2024. It also fell significantly short of the government’s original growth target of six to eight percent for 2025.

The economic team had recently slashed its 2025 GDP growth target to between 5.5 percent and 6.5 percent, citing increased external uncertainties, especially the ongoing conflicts in the Middle East and the imposition of United States (US) tariffs. 

The Cabinet-level Development Budget Coordination Committee (DBCC) had also narrowed the growth target range for 2026 to 2028 to six percent to seven percent, from the previously more ambitious six percent to eight percent.