THE Philippines could grow by an average of 5.8 percent annually over the next decade, but its reliance on imported energy and weaknesses in policy implementation could prevent the economy from reaching its full potential.
“The Philippines has a wide downside-skewed fan,” Bain & Co said in its latest Southeast Asia Outlook (SEA) 2026–2035.
However, it argued that the country’s growth outlook is exposed to significant downside risks, stressing its “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,” it said.
The report’s baseline forecast puts Philippine economic growth at an average of 5.8 percent from 2026 to 2035, higher than the country’s 4.6-percent average growth in 2016–2025.
It is higher compared with 5.4 percent for Indonesia, 4.3 percent for Malaysia, 2.7 percent for Singapore, and 2.2 percent for Thailand.
Vietnam is projected to remain the fastest-growing SEA-6 economy, with average annual growth of 6.2 percent.
The Philippines’ projected 5.8-percent growth would also be higher than the 4.1-percent average growth recorded by the SEA-6 economies during 2016–2025.
The forecast, however, remains below the 6.1-percent average growth that Bain and its partners had projected for the Philippines in their previous 2024–2034 outlook.
The Philippines also lagged its earlier forecast in the first two years of the outlook period. The economy grew by an average 5.1 percent in 2024 and 2025, compared with the previous projection of 6.1 percent.
“Philippines saw growth impeded by weaker investment and public sector execution,” the report said.
It added the country’s reliance on imported energy means external price increases can quickly feed into domestic inflation, putting pressure on households and potentially affecting consumption.
“Dependence on imported energy quickly turns external price shocks into household inflation,” the report said.
The report said strengthening energy security should therefore be among the country’s priorities over the next decade.
“The challenge is transition,” the report said.
“Progress on energy and institutional resilience will enable the AI (artificial intelligence) transition, but the more immediate priority is upgrading the BPO (business process outsourcing) sector to mitigate automation pressures,” it added.
It argued that the next few years will be “critical” and urged the country to move into “higher-value services while sustaining reform momentum through its next leadership transition.”
Grid capacity and reliability are increasingly important because they determine whether economies can expand industrial activity and accommodate power-intensive infrastructure, including facilities supporting AI.
For Southeast Asian economies, the report said strengthening energy systems requires reliable power supply, modernization of electricity grids, expanded storage capacity, and secure generation capacity.
“Without stronger energy security and governance consistency, growth could be capped below the Philippines’ potential,” the report said.
