‘Philippine must boost productivity to hit income goal’

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February 14, 2026 | 12:00am

MANILA, Philippines — The Philippines must raise annual productivity growth to achieve its target of tripling per capita income by 2040, with reforms aimed at boosting competition, attracting investment and improving governance seen as critical to sustaining high growth, according to the Organization for Economic Co-operation and Development.

In a report, the OECD said productivity growth in the Philippines will have to increase to 5.2 percent between 2025 and 2040 from 4.5 percent in the pre-pandemic period.

“To reach its 2040 income per capita target, productivity growth needs to accelerate by around three-quarters of a percentage point above the pre-pandemic average,” it said, adding that  “achieving this will require wide-ranging structural reforms to foster stronger competition.”

The Philippines’ development blueprint, AmBisyon Natin 2040, seeks to approximately triple per capita income relative to 2015 levels by 2040. This goal requires an average gross domestic product (GDP) growth of about six percent between 2025 and 2040.

With population growth expected to slow, the report said the demographic boost that supported expansion in the past would fade. The contribution of population growth to GDP growth is projected to decline to 0.8 percent over 2025 to 2040 from two percent over 2011 to 2019.

As a result, “sustaining high growth will increasingly depend on boosting productivity,” the OECD said.

The Paris-based organization noted that average annual labor productivity growth has been around two percent since 2011, with employment growth adding another 2.7 percentage points to annual GDP growth. Before the pandemic, productivity expanded at an annual average of about four percent.

However, gains have relied heavily on capital accumulation rather than technological progress and sectoral shifts have been limited. From 2011 to 2022, the between-sector component of productivity growth contributed just 0.5 percentage points, compared with 1.3 percentage points in Thailand and two percentage points in Vietnam.

To close the gap, the OECD called for an “ambitious package of productivity-enhancing structural reforms” centered on stronger competition, deeper global integration and better public governance.

“Key priorities include opening network industries by separating infrastructure ownership from service provision and ensuring fair access pricing,” it said.