The Philippines could achieve nearly 7% annual economic growth and transition into a predominantly middle-class society by 2040 if it fully implements key structural reforms, according to a new World Bank report released this week.
In its “Philippines Country Growth and Jobs Report,” the international financial institution said a reform-driven path could lift the country toward high-income status within the next 25 years, significantly outpacing the 5.4% annual growth expected under current trends.
“The implementation of the reforms is estimated to increase the annual average real GDP growth rate to 6.8 percent over the next 15 years,” the report stated. If realized, this would make the Philippine economy 23.6% larger by 2040 than it would be without such changes.
The World Bank estimates that up to 5.1 million new jobs could be created, while real wages could rise by 13% under this more ambitious trajectory.
Gonzalo Varela, lead economist and program leader for the World Bank, emphasized that reform implementation could push the Philippines close to the current threshold of high-income economies. “If these reforms are implemented, we’re thinking that within 25 years, we’re close to that threshold of high-income,” he said during the report’s launch.
Despite the country’s strong gains over the past decade and a half—including record-low unemployment and a doubling of GDP—the World Bank noted persistent challenges. Productivity growth remains sluggish, many workers are stuck in low-quality jobs, and leading firms are not expanding rapidly enough to generate sufficient employment.
Zafer Mustafaoglu, division director for the Philippines, Malaysia, and Brunei at the World Bank, pointed to regulatory complexity and rising costs in sectors like energy, logistics, and telecommunications as key constraints to inclusive growth.
The report also highlighted the Philippines’ growing domestic market orientation and waning participation in global value chains, warning that this could limit future opportunities for creating better jobs.
To overcome these hurdles, the World Bank is urging reforms that invest in human capital and infrastructure—both physical and digital—while fostering a competitive, pro-business environment. It also stressed the importance of mobilizing private capital, particularly in export-oriented sectors such as agriculture, manufacturing, tourism, and business services.
National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan echoed the need for a strategic shift, saying the country must do more than simply expand job numbers.
“It is not enough to create more jobs; we must also raise productivity and competitiveness,” Balisacan said, underscoring the need for innovation, technology diffusion, and improved access to education, healthcare, and digital connectivity.
He also emphasized strengthening governance and institutional frameworks to enable businesses to grow and meet evolving development challenges.
