Philippines Positioned for Stronger Expansion as Regional Growth Engines Shift Gears

The Philippines’ economic trajectory is set to accelerate, with GDP projected to expand by 5.7% in 2026 and 6.1% in 2027, according to the latest World Economic Situation and Prospects report released by the United Nations. These forecasts underscore the nation’s recovery momentum despite recent headwinds that tempered growth in 2025.

What’s Driving the Rebound?

Several factors are underpinning the Philippines’ economic resilience. A cooling inflation environment, combined with a buoyant labor market and steady remittance inflows from overseas workers, has kept household spending robust. The UN noted that these tailwinds, alongside government expenditures and private sector investment, are expected to sustain the growth narrative throughout the forecast period.

The anticipated growth targets align neatly with the government’s own expectations of 5-6% expansion this year and 5.5-6.5% growth in 2027. However, 2025 revealed some cracks, with GDP growth likely hovering between 4.8% and 5%—a deceleration linked to controversy surrounding flood control project allocations that dampened both business and consumer sentiment. The country’s official full-year GDP figures are scheduled for release on January 29.

Southeast Asia’s Growth Hierarchy

When stacked against its regional peers, the Philippines emerges as a standout performer, trailing only Vietnam in growth prospects. The UN’s rankings for 2026 paint a clear picture: Vietnam leads at 6% growth, trailed by the Philippines (5.7%), Cambodia (5.1%), Indonesia (5%), Malaysia (4%), Laos (3.8%), Timor-Leste (3.3%), Myanmar (3%), Thailand (2%), Singapore (1.8%), and Brunei (1.5%).

The 2027 hierarchy shows minimal reshuffling, with Vietnam maintaining its top position at 6.2%, followed by the Philippines (6.1%). This sustained second-place ranking reflects structural economic strengths and policy effectiveness in driving sustained expansion across the region.

The Inflation Question

Adding to the optimistic outlook, the UN forecasts inflation moderating to 2.3% in 2026 and 2.8% in 2027—both figures running below the Central Bank of the Philippines’ own projections of 3.2% and 3%, respectively. Year-end 2025 inflation readings came in at 1.8%, bringing the annual average to 1.7%, suggesting price pressures remain well-contained.

These projections position the Philippines’ economic performance above the broader East Asia average of 4.4%, cementing its role as a regional growth driver in the coming years.