Upgraded but underperforming: Philippines’ growth lags behind

The Philippines’ rise to upper-middle-income status was supposed to mark a new phase for one of Southeast Asia’s most closely watched emerging economies.

Instead, analysts say the milestone has done little to shield the country from short-term pressures weighing on growth: sluggish public spending, delayed infrastructure, high living costs and the fallout from investigations into alleged irregularities in flood control projects.

Those strains have left the Philippines looking like a regional laggard. Bank of America is forecasting gross domestic product growth of 2.5 per cent for 2026 – tying with Thailand for the slowest pace in the region – even as it raised its overall Asean growth forecast to 5 per cent, up from 4.7 per cent at the end of the second quarter.

“The Philippines is expected to see a sharp slowdown relative to 2025,” the bank said in its September report, comparing that to Singapore’s projected 5.1 per cent growth, Malaysia’s 5.2 per cent, Indonesia’s 5.3 per cent and Vietnam’s 8.2 per cent.