The Philippines does not need to be in recession to prepare for one. In fact, the right time to prepare is when growth is still positive. The IMF still projects 5.6 percent growth in 2026, but the recent trend is not comforting: full-year GDP growth slowed to 4.4 percent in 2025 from 5.7 percent in 2024, fourth-quarter growth was only 3.0 percent, March 2026 inflation climbed to 4.1 percent, and February unemployment was 5.1 percent, higher than a year earlier. That is not a collapse. It is a warning that the economy has become more vulnerable to the next shock.

One reason is obvious: energy. DOE data show imported energy supplied about 55 percent of total primary energy in 2024, while overall self-sufficiency slipped to 45 percent. In power generation, self-sufficiency fell from 42 percent to 39 percent even as total generation rose to 126,941 gigawatt-hours. For an import-dependent country, that means every external fuel shock leaks into transport, food, electricity and business costs. A global downturn does not have to begin in Manila to hurt Filipino households; it can arrive through fuel prices and electric bills.

That is why the current energy policy is not working well enough for the country’s long-term prospects. On paper, the direction is correct: the DOE says it is targeting a 35 percent renewable share in the power mix by 2030 and 50 percent by 2040. In reality, coal still generated 79,359 GWh in 2024, or about 62.5 percent of Philippine power, while renewables supplied 28,193 GWh, or 22.2 percent. Renewable installed capacity did rise to 9,520 MW, and solar capacity jumped 63.9 percent in a year. But targets are not the same as delivery.

The bottleneck is no longer ambition; it is execution. The World Bank says transmission development has become a major constraint, that delays in grid expansion are already stranding new renewable assets, and that weak implementation of electricity-market reforms has kept competition incomplete. The IMF echoes the same problem list: weak grid infrastructure, high capital costs, land acquisition delays and skills shortages. In other words, the Philippines is adding policy announcements faster than it is adding a power system that can absorb them.

The result is a punishing cost structure. The World Bank says the Philippines had the second-highest average electricity tariff in ASEAN, after Singapore, based on July 2024 data. Residential and industrial tariffs were about US¢21 and US¢13 per kilowatt-hour, higher than Indonesia’s US¢9 and US¢6, and Vietnam’s US¢12 and US¢10. The same report warns that limited competition in generation and retail, plus red tape and lengthy permitting, have helped keep electricity expensive enough to hurt affordability and competitiveness. That is not a small policy failure. It is a long-term growth problem.

The gas strategy also deserves skepticism. Natural gas can be a transition fuel, but the Philippines is increasingly replacing one imported dependency with another. A U.S. Commerce market note says gas already accounts for 22 percent of the power mix, that 46 percent of Philippine natural gas now comes from imported LNG, and that LNG demand could rise from 1.7 GW in 2023 to 11.3 GW by 2040. That is not energy security. Preparing for a possible recession therefore means more than saving money. It means speeding up the grid, lowering power costs, and treating domestic clean energy as economic defense, not just climate policy. If the next downturn comes, countries with cheaper, more reliable power will bend; countries with expensive imported energy will break first. The Philippines still has time to decide which it will be.