World Bank prunes forecast for PHL

The US-based World Bank (WB) last week sharply lowered its forecast for the Philippine economy, warning that rising uncertainty and the continuing global oil shock have dragged the country`s economy.

In its latest Philippine Economic Update, the Washington-based lender now expects the country’s economy to expand 3.7 percent in 2026, a steep downgrade from the 5.3 percent growth it projected in December. It also cut its 2027 forecast to 5.2 percent from 5.4 percent.

The western lending institution noted the Philippines` eroded household spending, business investment, and job creation.

Meanwhile, the World Bank is preparing a separate $1-billion Philippines Second Growth and Jobs DPL, which is targeted for board approval on Dec. 11, 2026. Unlike traditional project loans that finance specific infrastructure or government projects, a DPL provides direct budget support in exchange for agreed policy and institutional reforms, helping governments implement measures aimed at strengthening economic management as well as promoting sustainable growth.

According to the World Bank’s concept project information document (PID) disclosed last Tuesday, Aug. 4, the proposed operation seeks to support reforms that strengthen fiscal management, promote private investment and innovation, as well as improve labor force capabilities.

The Department of Finance (DOF) will serve as the borrower, while implementation will involve several government agencies, including the Department of Economy, Planning, and Development (DEPDev), the Department of Budget and Management (DBM), the Department of Trade and Industry (DTI), the Department of Education (DepEd), the Department of Social Welfare and Development (DSWD), the Department of the Interior and Local Government (DILG), the Bangko Sentral ng Pilipinas (BSP), the Bureau of Internal Revenue (BIR), the Securities and Exchange Commission (SEC), and the Technical Education and Skills Development Authority (TESDA), among others.