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THE World Bank has maintained its economic growth predictions for the Philippines despite increased uncertainty stemming from the Trump administration\u2019s tariff strategies.<\/p>\n
In its semi-annual Global Economic Prospects report, the multilateral institution indicated that the Philippine gross domestic product (GDP) is anticipated to grow by 5.3% this year, 5.4% in 2026, and 5.5% in 2027.<\/p>\n
The forecasts from the World Bank were beneath the government\u2019s GDP target range of 6-8% for this year through 2028.<\/p>\n
These estimates remained unchanged from the bank\u2019s East Asia and Pacific report published in April.<\/p>\n
Nevertheless, they were lower than the forecasts in January\u2019s edition of the Global Economic Prospects report released prior to Donald J. Trump assuming the US presidency on January 20.<\/p>\n
The most recent 2025 projection was 0.8 percentage points (ppt) below the 6.1% estimate from January, while the 2026 projection was 0.6% lower than the January estimate of 5.9%.<\/p>\n
The GDP growth for the Philippines this year is still among the swiftest within the East Asia and Pacific country forecasts, following Palau\u2019s 8.6%, Mongolia\u2019s 6.3%, and Vietnam\u2019s 5.8%, but matching Samoa\u2019s 5.3%.<\/span><\/p>\n For 2026, the Philippines will rank as the second-fastest in the region, trailing only behind Vietnam\u2019s 6.1%. In 2027, the Philippines is again anticipated to be the second-fastest economy after Vietnam\u2019s 6.4%.<\/p>\n \u201cGrowth in East Asia and Pacific (EAP) is anticipated to decelerate from 5% in 2024 to 4.5% in 2025, slightly below previous expectations due to rising trade barriers and associated policy uncertainty,\u201d the World Bank stated.<\/p>\n In April, Mr. Trump declared a 10% tariff on all trade partners, alongside elevated reciprocal tariffs on others, including the Philippines, which is currently facing a 17% rate.<\/span><\/p>\n The reciprocal tariffs have been put on hold for 90 days until July as nations negotiate lower rates with the US.<\/p>\n The World Bank anticipates EAP growth to be 4% for both 2026 and 2027, slightly below prior forecasts.<\/p>\n \u201cThe downgrade mirrors the effect of higher tariffs on growth, which is projected to be partially counterbalanced by policy support measures in EAP economies, especially in China. In numerous regional economies, the worsening outlook will hinder job creation and the per capita income recovery concurrent with advanced economies,\u201d it noted.<\/span><\/p>\n The World Bank indicated that downside risks to the baseline projections have intensified since January.<\/p>\n \u201cFurther alterations in trade policy are likely to drastically affect economies throughout the region due to their elevated trade openness and connections to global production networks. Other downside risks encompass tighter global financial circumstances, significantly diminished growth in major economies, heightened geopolitical tensions, and natural calamities,\u201d it commented.<\/p>\n A partial resolution of trade disputes and a reduction in trade policy uncertainty could very well enhance growth in the region beyond the baseline, the World Bank added.<\/span><\/p>\n TRADE COLLAPSE The global lender decreased its projections for almost 70% of all economies \u2014 including the US, China, and Europe, as well as six emerging market regions \u2014 from the levels it anticipated six months prior to Mr. Trump taking office.<\/p>\n Mr. Trump has disrupted global trade with a series of sporadic tariff increases that have raised the effective US tariff rate from below 3% to the mid-teens \u2014 its highest in nearly a century \u2014 prompting retaliation from China and other nations.<\/p>\n The World Bank is the latest entity to adjust its growth forecast due to Mr. Trump\u2019s unpredictable trade policies, although US officials maintain that the adverse effects will be mitigated by a surge in investment and pending tax cuts.<\/p>\n It refrained from predicting a recession but stated that global economic growth this year would be the weakest outside of a recession since 2008. By 2027, global GDP growth was anticipated to average just 2.5%, marking the slowest rate of any decade since the 1960s.<\/p>\n The report estimated that global trade would expand by 1.8% in 2025, down from 3.4% in 2024 and roughly a third of its 5.9% level in the 2000s.\u00a0<\/span><\/p>\n The forecast relies on tariffs in effect as of late May, including a 10% US tariff on imports from most nations. It does not include increases announced by Mr. Trump in April, which were postponed until July 9 to facilitate ne<\/span>gotiations.\u00a0<\/span><\/p>\n The World Bank indicated that global inflation was projected to rise to 2.9% in 2025, remaining above pre-COVID-19 levels due to tariff hikes and stringent labor markets.<\/p>\n \u201cRisks to the global forecast continue to lean distinctly to the downside,\u201d it stated. The lender remarked that its models demonstrated that a further increase of 10 percentage points in average US tariffs, on top of the 10% rate already in place, along with proportional retaliation from other nations, could reduce the outlook for 2025 by another half percentage point.<\/p>\n Such an escalation in trade barriers would lead to \u201cglobal trade seizing up in the latter half of this year\u2026 coupled with a widespread collapse in confidence, surging uncertainty and turmoil in financial markets,\u201d the report concluded.<\/p>\n Nonetheless, it indicated that the probability of a global recession was under 10%.<\/p>\n \u2018FOG ON A RUNWAY\u2019 However, Mr. Kose mentioned that there were indications of enhanced dialogue on trade that could help clear uncertainty, and supply chains were adjusting to a new global trade landscape, rather than collapsing. Global trade growth might modestly bounce back in 2026 to 2.4%, and advancements in artificial intelligence could also drive growth, he stated.<\/p>\n \u201cWe believe that ultimately the uncertainty will diminish,\u201d Mr. Kose expressed. \u201cOnce the type of fog we are experiencing lifts, the trade engine may begin to operate again, albeit at a slower rhythm.\u201d<\/p>\n Mr. Kose remarked that while conditions could worsen, trade was ongoing and China, India, and others were still showcasing strong growth. Numerous nations were also exploring new trade alliances that could yield benefits in the future, he noted.<\/p>\n The World Bank conveyed that the global outlook had \u201cdeteriorated significantly\u201d since January, predominantly due to advanced economies, now projected to grow by merely 1.2%, down half a percentage point, following a 1.7% expansion in 2024. \u2014 Reuters<\/b> with<\/i> ARAI<\/b><\/p>\n
\n<\/b>Simultaneously, the World Bank on Tuesday downgraded its global growth forecast for 2025 by four-tenths of a percentage point to 2.3%, asserting that elevated tariffs and increased uncertainty posed <\/span>a \u201csignificant headwind\u201d for nearly all economies.<\/span><\/p>\n
\n<\/b>\u201cUncertainty remains a substantial hindrance, akin to fog on a runway. It retards investment and obscures the future,\u201d World Bank Deputy Chief Economist Ayhan Kose told Reuters during an interview.<\/p>\n