World Bank sees 2026 Philippine growth at 4.6%
Philippines likely to miss GDP targets through 2028
Philippine economic growth would likely remain below its potential of at least six percent until the end of the Marcos Jr. administration, according to the latest forecasts by the World Bank.
Documents on the latest $800-million Philippines Growth and Jobs Development Policy Loan (DPL) 1, approved by the Washington-based multilateral lender last week, showed a projected 4.6- percent gross domestic product (GDP) growth rate for the country in 2026, inching up from the post-pandemic-low of 4.4 percent in 2025. This forecast is below the government’s downgraded five- to six-percent growth target for the year.
For 2027, the World Bank expects the Philippine economy to grow by 5.3 percent, which would also be lower than next year’s downscaled 5.5- to 6.5-percent goal.
By the time President Ferdinand R. Marcos Jr. steps down and turns over to a new administration in 2028, World Bank projections showed 5.5-percent GDP growth, still below the six- to seven-percent target.
“The growth outlook remains moderate over the near term, with activity expected to remain subdued in 2026 before gradually strengthening... The impact of the government’s anti-corruption efforts and a significantly lower infrastructure budget in 2026 is expected to weigh on public investment,” the World Bank said.
The lender added that a smaller statistical carry-over into 2026 signals weaker initial momentum, with growth projected to average 5.2 percent in 2026 to 2028, driven by recovering private domestic demand amid easing inflation and financing conditions.
“Private consumption is expected to benefit from stable labor income and improved confidence, while private investment gradually strengthens alongside improved credit conditions and a normalization of public capital spending. External demand, particularly for electronics and artificial intelligence (AI)-related exports, is projected to remain supportive, although global trade uncertainty presents downside risks,” the document said.
This World Bank report was prepared in mid-February before it was disclosed last week, which means that the impact of the war in the Middle East was not yet taken into consideration by the lender in its GDP growth forecasts.
At that time, the World Bank projected headline inflation to stay within the Bangko Sentral ng Pilipinas’ (BSP) two- to four-percent target range, averaging about 2.8 percent in 2026 to 2028.
Before the domestic price pressures wrought by the Middle East conflict that sent global oil prices soaring, the World Bank believed that the BSP would likely keep a neutral-to-supportive policy stance while balancing the still-negative output gap against risks from exchange-rate volatility and food inflation. A negative output gap refers to the economy expanding below its potential, which, for the Philippines, is estimated at about six percent annually.
As Manila Bulletin reported earlier, the World Bank is scheduled to approve more loans and grants in March, including the $18.85-million grant for the Pandemic Fund-Resilient Philippines Project on March 26, as well as the record $1-billion loan for the Philippines Sustainable Agriculture Transformation (PSAT) Program and $24.5-million grant for the Technical Assistance for Sustainable Agriculture Transformation in the Philippines (TASAT) Project, both on March 27.
An updated schedule showed that the World Bank moved the approval of the $600-million Project for Learning Upgrade Support and Decentralization (PLUSD) to April 3 instead of March. The lender is also eyeing to green-light the $800-million Philippines Second Energy Transition and Climate Resilience DPL on April 17.