World Bank cuts PH growth outlook amid natural disasters, weak investor confidence

Multilateral lender World Bank has trimmed its economic growth outlook for the Philippines, citing “domestic shocks” such as recent natural disasters and weak investor confidence undermined by the ongoing corruption scandal.

In the December 2025 edition of its Philippine Economic Update, the World Bank is projecting the country’s economy – as measured by gross domestic product (GDP) – to grow by 5.1% this year, slower than the previous forecast of 5.3% in July.

The lender’s outlook is consistent with the Department of Economy, Planning, and Development’s (DEPDev) expectation that the economy is “very unlikely” to hit the government’s growth target range of 5.5% to 6.5% for 2025 as corruption concerns dampen both consumer and investor sentiment. 

The World Bank said the 2025 growth slowdown was driven by lower domestic investment, weak business confidence, a significant decline in foreign direct investment, and domestic shocks – from typhoons and flood-related disruptions to governance concerns that delayed public investments. 

The lender’s outlook also cited slower services exports which reflected weaker growth in business services and fewer tourist arrivals.

However, a “modest recovery” is expected in 2026 to 2027 at 5.3% and 5.4%, respectively, supported by resilient consumption and easing inflation.

The World Bank said a sustained growth in the coming years would require stronger execution of public investments, credible fiscal consolidation, and structural reforms to enhance competitiveness in the tradables sector (including manufacturing, agriculture, information technology, and tourism) and to harness high-potential urban corridors.

It added that investments are expected to strengthen as public infrastructure projects would regain momentum backed by recent investment liberalization reforms in telecommunications, transport, logistics, and renewable energy.

If full-year growth falls below 5.5%, 2025 would mark the third consecutive year that the Philippines falls short of its economic target. Growth hit 5.6% in 2024, below the 6.0 to 6.5% goal; and 5.5% in 2023, lower than the 6.0% to 7.0% target. — JMA, GMA Integrated News