The World Bank expects the Philippines’ economy to grow 5.3 percent in 2025, a slowdown from its January forecast of 6.1 percent and the actual 5.7 percent expansion in 2024 amid heightened trade tensions and policy uncertainty in the global economy.
The Philippines is forecast to grow 5.4 percent in 2026 and 5.5 percent in 2027, according to the World Bank’s latest Global Economic Prospects report.
Growth in East Asia and the Pacific (EAP) is projected to decelerate to 4.5 percent this year from an estimated 5 percent in 2024, as the effects of higher trade barriers, policy uncertainty, a weaker global growth outlook and softer confidence weigh on investment, exports and consumption in the region.
China’s growth is projected to slow to 4.5 percent, and in EAP excluding China, growth is expected to slow to 4.2 percent in 2025.
Compared with January projections, growth in EAP is expected to be 0.1 percentage point lower in 2025, with the impact of trade tensions partly offset by policy support measures, notably in China.
In 2026 and 2027, growth in EAP is projected to remain subdued at 4 percent, slightly below previous projections and potential growth estimates, the bank said.
Global growth in 2025 is expected to be at its slowest pace since 2008 outside of outright global recessions, the World Bank said. The turmoil has resulted in growth forecasts being cut in nearly 70 percent of all economies—across all regions and income groups.
Global growth is projected to slow to 2.3 percent in 2025, nearly half a percentage point lower than the rate that had been expected at the start of the year. A global recession is not expected. Nevertheless, if forecasts for the next two years materialize, average global growth in the first seven years of the 2020s will be the slowest of any decade since the 1960s.
“Outside of Asia, the developing world is becoming a development-free zone,” said Indermit Gill, the World Bank Group’s chief economist and senior vice president for Development Economics.
“It has been advertising itself for more than a decade. Growth in developing economies has ratcheted down for three decades—from 6 percent annually in the 2000s to 5 percent in the 2010s—to less than 4 percent in the 2020s. That tracks the trajectory of growth in global trade, which has fallen from an average of 5 percent in the 2000s to about 4.5 percent in the 2010s—to less than 3 percent in the 2020s. Investment growth has also slowed, but debt has climbed to record levels,” Gill said.
Growth is expected to slow in nearly 60 percent of all developing economies this year, averaging 3.8 percent in 2025 before edging up to an average of 3.9 percent over 2026 and 2027.
That is more than a percentage point lower than the average of the 2010s. Low-income countries are expected to grow 5.3 percent this year—a downgrade of 0.4 percentage point from the forecast at the start of 2025. Tariff increases and tight labor markets are also exerting upward pressure on global inflation, which, at a projected average of 2.9 percent in 2025, remains above pre-pandemic levels.
Slowing growth will impede developing economies in their efforts to spur job creation, reduce extreme poverty, and close per capita income gaps with advanced economies.
Per capita income growth in developing economies is projected to be 2.9 percent in 2025—1.1 percentage points below the average between 2000 and 2019. Assuming developing economies other than China are able to sustain an overall gross domestic product (GDP) growth of 4 percent—the rate forecast for 2027—it would take them about two decades to return to their pre-pandemic trajectory with respect to economic output.
Global growth could rebound faster than expected if major economies are able to mitigate trade tensions—which would reduce overall policy uncertainty and financial volatility, it said.
The analysis finds that if today’s trade disputes were resolved with agreements that halve tariffs relative to their levels in late May, global growth would be 0.2 percentage point stronger on average over the course of 2025 and 2026.
“Emerging-market and developing economies reaped the rewards of trade integration but now find themselves on the frontlines of a global trade conflict,” said M. Ayhan Kose, the World Bank’s deputy chief economist and director of the Prospects Group.
“The smartest way to respond is to redouble efforts on integration with new partners, advance pro-growth reforms, and shore up fiscal resilience to weather the storm. With trade barriers rising and uncertainty mounting, renewed global dialogue and cooperation can chart a more stable and prosperous path forward,” Kose said.
The report argues that in the face of rising trade barriers, developing economies should seek to liberalize more broadly by pursuing strategic trade and investment partnerships with other economies and diversifying trade—including through regional agreements. Given limited government resources and rising development needs, policymakers should focus on mobilizing domestic revenues, prioritizing fiscal spending for the most vulnerable households, and strengthening fiscal frameworks.
To accelerate economic growth, countries will need to improve business climates and promote productive employment by equipping workers with the necessary skills and creating the conditions for labor markets to efficiently match workers and firms, it said.
Global collaboration will be crucial in supporting the most vulnerable developing economies, including through multilateral interventions, concessional financing, and, for countries embroiled in active conflicts, emergency relief and support.
