World Bank slashes Philippines growth forecasts

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April 26, 2025 | 12:00am

MANILA, Philippines — The World Bank has slashed its economic growth forecasts for the Philippines for this year and the next due to uncertainty about trade policy and expectations of slower global economic activity.

Based on its East Asia and the Pacific Economic Update for April 2025 released yesterday, the multilateral lender now expects the gross domestic product (GDP) of the Philippines to grow by just 5.3 percent this year, lower than the 6.1-percent forecast it provided in January.

The revised forecast is below the government’s six to eight percent growth target for 2025 and the 5.7-percent expansion posted in 2024.

Earlier, National Economic and Development Authority Secretary Arsenio Balisacan said that while the government still expects to hit the low end of the growth target for the year, the upper end might no longer be possible amid the uncertainty triggered by the reciprocal tariffs imposed by the United States on its trading partners.

However, Balisacan said the government needs more information including the release of the first quarter economic performance, before adjusting its growth targets.

Despite the World Bank’s downward adjustment of its growth projection for the Philippines, the forecast is the second highest in Southeast Asia, just behind Vietnam’s 5.8 percent, but ahead of Indonesia’s 4.7 percent, Cambodia’s four percent, Malaysia’s 3.9 percent, Laos’ 3.5 percent and Thailand’s 1.6 percent.

“In the Philippines, private consumption is expected to contribute to growth due to easing inflation and monetary policy,” the World Bank said.

For next year, the World Bank expects the Philippines to grow by 5.4 percent, also down from its previous forecast of six percent and below the government’s six to eight percent target.

If the World Bank’s growth forecast is realized, the Philippines would be the second fastest growing economy in Southeast Asia in 2026, next to Vietnam, which is expected to post a
6.1-percent growth.

 Meanwhile, the World Bank’s Macro Poverty Outlook released yesterday also showed that the multilateral lender expects the Philippines to grow by 5.5 percent in 2027, lower than the government’s six to eight percent growth goal for that year.

“Heightened trade policy uncertainty and their combined impact on global growth represents the main downside risk,” the World Bank said, noting that prolonged uncertainty could trigger capital flights.

The United States’ imposition of reciprocal tariffs on its trade partners, including the Philippines, is causing global uncertainty, affecting both business and consumer confidence, which could dampen investments and consumption.

The World Bank said domestic activity, however, could improve amid lower inflationary pressures and declining global commodity prices.