PIDS sees PH economy growing 5% in 2025, 5.3% in 2026

State think tank Philippine Institute for Development Studies (PIDS) is projecting the country’s economy to grow by 5% in 2025 and 5.3% in 2026 even as it flagged risks that might offset growth momentum.

At a webinar on Thursday, PIDS senior research fellow Dr. John Paolo Rivera presented the think tank’s growth outlook for last year and this year, which he said are “very much aligned with the forecast of multilateral agencies—the Asian Development Bank and the World Bank.”

The ADB, in its December Asian Development Outlook, also projected that the Philippines would grow 5% in 2025 and 5.3% in 2026, citing “reduced public infrastructure spending” amid the flood control corruption probe. 

The World Bank estimated the country’s economic growth at 5.1% last year and 5.3% in 2026 amid “domestic shocks” such as recent natural disasters and weak investor confidence undermined by the ongoing corruption scandal.

The multilateral lenders’ outlooks are 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.

Rivera said that the 2025 and 2026 growth estimates could be deemed “respectable outcomes by regional standards.”

“But as we all know, we remain below the economy’s pre-pandemic potential. While these figures signal stability, they do not yet tell us that economic transformation is happening,” he said.

Economic expansion averaged 5% in the first nine months of 2025, after third-quarter GDP slowed to 4.0%—the weakest in four years and the lowest since the 3.8% recorded in the first quarter of 2021 when strict COVID-19 lockdowns were in place.

In 2024, the Philippine economy as measured by gross domestic product (GDP)—the value of goods and services produced in a period—rose 5.7%.

Rivera said that the “key headwinds,” or risks to watch out for in 2026, include the following:

• Global slowdown and protectionism
• Climate shocks and food inflation 
• Weak investment recovery
• Governance and policy credibility risk

The PIDS senior fellow said that governance would be the most “pervasive risk,” as “when governance is weak, shocks amplify, and when it is strong, the economy is able to absorb stress and, of course, recover faster.”

“Good governance is the most powerful macroeconomic stabilizer. It attracts private investments without requiring additional public spending, it makes every peso work harder, and it restores confidence in uncertain times,” Rivera said. —VBL, GMA Integrated News