The World Bank has revised its growth outlook for the Philippines, lowering the projection for 2026 to 3.7% from 5.3%. This adjustment stems from heightened policy uncertainty and a sharp rise in global oil prices, which have adversely affected consumer spending and investment.
Factors Contributing to the Downgrade
In its latest Philippine Economic Update, the World Bank also cut its growth estimate for 2027 to 5.2%, down from 5.4%. The report identifies two main factors contributing to the economic slowdown.
Two factors help to explain a recent growth deceleration. The first is a contraction in investment, driven by rising global and domestic policy uncertainty... The second is the current conflict in the Middle East, which produced a negative terms-of-trade shock.
World Bank
- Investment slowdown due to policy uncertainty.
- Increased oil prices affecting domestic costs.
The report highlights that a review of public infrastructure projects initiated in mid-2025 has further hampered investment initiatives, resulting in slower project execution.
The ongoing conflict in the Middle East has also triggered a surge in oil prices, which has quickly translated into increased costs for consumers in the Philippines, further straining economic activity.