The Philippine economy is poised to regain momentum through 2027 as investment recovers from a corruption-linked slowdown in infrastructure spending, according to the Organization for Economic Cooperation and Development (OECD).

The OECD said in its Economic Survey of the Philippines released on Thursday, Feb. 12, that gross domestic product (GDP) is projected to expand 5.1 percent in 2026 and accelerate to 5.8 percent in 2027.

The forecast follows a sharp deceleration to 4.4 percent in 2025, a slump the Paris-based organization attributed to disruptions in public works amid the national graft scandal.

If realized, the recovery would bring growth in line with the government’s revised targets of five percent to six percent for 2026 and 5.5 percent to 6.5 percent for the following year.

According to OECD, the rebound will be driven by normalization of public construction and declining borrowing costs, while robust labor market and cooling price pressures support household spending.

The OECD expects inflation to settle at 2.6 percent this year and three percent in 2027, remaining within the central bank’s two percent to four percent target range after hitting a nine-year low of 1.7 percent in 2025.

Despite the optimistic outlook, the OECD warned that risks are tilted to the downside. Domestic demand could be hampered if public investment remains sluggish due to stricter corruption controls and fragile investor sentiment.

The report also flagged “tail risks” including natural disasters, energy shortages, and potential labor market displacement caused by artificial intelligence.

Energy security remains a primary concern for the Philippines, which relies heavily on imported coal and liquefied natural gas. With the Malampaya gas field nearing depletion and frequent outages at aging power plants, the OECD noted that the risk of power shortages and energy-driven inflation could compromise industrial competitiveness and strain household budgets.

The report also issued a warning regarding the business process outsourcing sector, a cornerstone of the Philippine economy. Advances in artificial intelligence (AI) and proposed United States (US) legislation, such as the Halting International Relocation of Employment (HIRE) Act, pose structural threats to the industry.

The OECD estimated that 36 percent of business process outsourcing (BPO) positions could be affected by AI, necessitating large-scale reskilling programs to prevent rising inequality.

To achieve the government’s “AmBisyon Natin 2040””goal of becoming a prosperous middle-class society, the Philippines must more than double its income per capita by 2040. 
OECD said this requires sustained annual growth of approximately six percent, surpassing the 4.8 percent average seen between 2011 and 2024.

As the nation’s demographic dividend begins to fade, productivity growth must rise to 5.2 percent to offset slowing population growth.

The OECD urged the Philippines to dismantle regulatory barriers to attract more foreign direct investment, which currently lags behind regional peers Malaysia and Vietnam.

It also called for enforcing the 1957 law requiring a lobbyist registry to curb corruption and the influence of corporate conglomerates. Such measures are essential to enhance transparency and ensure that the country's economic gains are not eroded by political capture.