DBS bets on strong PH growth rebound but flags energy risk
The Philippines has the potential to grow by an average of 5.8 percent a year from 2026 through 2035, according to DBS Bank Ltd., though it warned that the country’s heavy reliance on imported energy could weigh on that expansion.
In a report copublished with Bain & Company and Vriens & Partners, the Singapore-based bank projected that the Philippines would be the second-fastest-growing economy among the six major Southeast Asian markets it studied, behind Vietnam at 6.2 percent.
The projected growth for the Philippines will also outpace the average forecast growth of 4.8 percent for the region. The study covered Indonesia, Malaysia, Singapore and Thailand in addition to the Philippines and Vietnam.
DBS noted that the Philippines enjoys a legion of young workforce and steady remittance inflows. A consumption-led model is also seen to insulate the economy from global trade disruptions.
But the bank said the country’s growth architecture is vulnerable.
“Dependence on imported energy quickly turns external price shocks into household inflation, while weak policy implementation hinders the conversion of investment commitment into actual deployment,” DBS said.
“Additionally, artificial intelligence (AI)-driven automation creates longer-term risk to the business process outsourcing (BPO) sector,” it added. “Without stronger energy security and governance consistency, growth could be capped below the Philippines’ potential.”
Losing momentum
Those vulnerabilities showed this year. In the first half, the domestic economy expanded just 2.6 percent, well below the government’s revised target of 3.5 percent to 4.5 percent for 2026.
Growth was weighed down by the fallout from the Middle East conflict, which pushed up global oil prices and battered net energy-importing economies like the Philippines. The slowdown happened at a time when the country has yet to fully recover from a confidence shock tied to a major corruption scandal.
At the same time, growth is losing momentum as the Philippines misses out on the global AI boom gains that have helped some of its Southeast Asian neighbors weather the war-driven headwinds.
Looking ahead, DBS said progress on energy and institutional resilience would enable the AI transition, but the more immediate priority is upgrading the country’s BPO sector to mitigate automation pressures.
“The next few years will be critical,” the bank said. “The Philippines must move into higher-value services while sustaining reform momentum through its next leadership transition.”
