• Key policy rate: 4.25% (February 2026)
• Q4 2025 growth rate: 3%; full-year 2025: 4.4%
• Manufacturing Purchasing Managers’ Index reading: 52.9 (January 2026)
• Inflation rate: 2% (January 2026)  

The Philippines benefits greatly from a young demographic, with nearly two-thirds of its population within the working age bracket of 15 to 64. Filipinos are generally good English speakers and are tech-savvy, which bodes well for jobs in the service sector. The country is a favoured location for companies in the global outsourcing industry and has overtaken India as the call centre capital of the world.

Economic growth has been robust after the COVID-19 pandemic, although quarterly expansion has slowed to the 5 per cent level against an annual growth target of 7-8 per cent. Two-thirds of the domestic economy is driven by the services sector, which is also the fastest-growing segment. Services grew by 6.7 per cent in 2024, dominated by wholesale and retail trade with a 30 per cent share. Meanwhile, the accommodation and food service industry has been leading the charge with double-digit increases since 2022.

The industrial sector contributes about 28 per cent of the national output, while the share of agriculture is less than a tenth of GDP.

In terms of expenditure, consumer spending is the biggest growth driver at over 70 per cent of GDP. A big chunk of household spending is supported by millions of Filipinos working abroad that send cash remittances back home. Capital investments follow at one-fourth of economic activity, while public spending accounts for about 15 per cent of the local economy. The Bangko Sentral ng Pilipinas has significantly reduced borrowing rates since 2024 to support greater economic activity, however, some slowdown in consumption and investments is likely to persist until the first half of 2026 due to a corruption scandal involving government flood control projects.

As a small, open economy, the Philippines is exposed to risks in the global supply chains and global financial markets, as well as geopolitical tensions.

House view: Lundgreen’s is optimistic that the Philippines’ growth story will remain robust alongside its peers in Southeast Asia. Greater investments that will plug domestic infrastructure gaps, combined with sustained fiscal prudence and better public governance, will allow the Philippine economy to attract more private capital and sustainably grow in the coming years.

Updated as of 23 February 2026