Worldbox Business Intelligence Risk Rating – May 2026
THE PHILIPPINES
Summary
| Overall Risk Score 27/40 (Stable)
Political risk: Stable 7/10 Economic risk: Stable 7/10 Commercial risk: Stable 7/10 Technology risk: Stable 6/10 The risk assessment of a country is made up of four components, being Political, Economic, Commercial and Technological. Each component is scored out of 10 with 1 being the highest risk and 10 the lowest. |
ESG Risk: 7/10 (Stable)*
*Environmental, social and governance (ESG) issues are becoming increasingly important to companies, investors and consumers in Southeast Asia. That is why we are now preparing a separate ESG score and section with our quarterly country risk reports. We explain how each country rates, looking at the E, S and G individually, and outline recent developments. |
Political Risk – Stable at 7
The Philippines Is a multi-party, representative democracy modelled on the US system. This involves a presidential system of government with a bicameral legislature and an independent judiciary. The president is limited to one 6-year term. According to Freedom House:
“Elections are free from overt restrictions. However, established political elites benefit from structural advantages, and highly organized disinformation campaigns and widespread vote buying undermine fair competition. Corruption is endemic, and anticorruption bodies struggle to uphold their mandates. Journalists and activists perceived as critical of the government or other powerful interests can face criminal cases, and in some cases violent and even deadly attacks.”
The current president, Ferdinand “Bongbong” Marcos Junior, was elected in a landslide at the May 2022 presidential election. He is the son of former dictator Ferdinand Marcos, who ruled the country from 1965 to 1986.
The approval ratings of both President Marcos and Vice President Sara Duterte fell sharply in the first quarter of 2026. Marcos’ approval ratings plummeted to 19% from 22%, and that of Duterte’s to 28% from 34% for the fourth quarter of 2025.
Three main factors were behind the fall in Marcos’s ratings: the perceived failure to hold senior staff accountable in the flood control controversy, anger over the transfer of former president Rodrigo Duterte to The Hague despite the Philippines’ withdrawal from the Rome Statute, and dissatisfaction with the government’s handling of rising fuel prices – the impact of the Middle East conflict on the Philippines is discussed in the political risk section of this Bulletin.
The main factors driving Duterte’s declining popularity include the filing of four impeachment complaints against her, confirmation of charges involving her father, former president Rodrigo Duterte in the International Criminal Court, and statements she has made expressing regret over supporting Marcos in 2022.
Public hearings on the impeachment case against Philippine Vice-President Sara Duterte began in Congress in March. Duterte is accused of misusing public funds and threatening to kill President Ferdinand Marcos Jr. If convicted, she will be removed as vice-president and barred from running in elections. Duterte denies the allegations.
Marcos and Sara Duterte entered into a marriage of convenience to contest the May 2022 election. In June 2024, Sara Duterte announced her resignation from office, and the once celebrated “UniTeam” came to an end. The president and vice-president are elected separately in the Philippines. The president is limited to a single six-year term while the vice-president can run for president at the end of their term. If the impeachment proceeds, the case will move to the Senate for trial, which would result in an acquittal or a conviction.
Duterte was long seen as the strongest contender to succeed Marcos but the recent fall in her ratings suggest this is no longer the case. The BBC argues that If Duterte is shut out of the 2028 presidential race, Marcos will have more scope to push for a friendlier successor, one that will not harbour a political vendetta against him. If Duterte survives impeachment, the BBC quotes analysts as saying she could come out stronger.
Economic Risk – Stable at 7
The Philippines is the third largest economy in the Southeast Asian region after Indonesia and Thailand. The economy has been one of the most dynamic in the East Asia and Pacific region, powered by increasing urbanization, a growing middle class, and a large and young population. Services and manufacturing account for around 90% of GDP with the share of agriculture falling steadily to around 10%.
The IMF completed an Article IV report on the Philippines in December 2025. In summary, the IMF reported that the economy has achieved successful disinflation on the back of a well-calibrated monetary policy tightening cycle and concerted government measures to reduce food prices. Domestic demand, underpinned by public spending, has been resilient, supporting headline growth. This report was, of course, carried out before the Middle East conflict began to impact the economy in general and inflation in particular.
The IMF added that the economy has been affected by the recent increase in global trade barriers, though its direct exposures remain relatively limited, playing a
mitigating role. The IMF expected growth to remain robust but below its potential in the near term amid heightened external challenges, while inflation is expected to remain muted. Risks are tilted to the downside, stemming from rising global trade barriers and policy uncertainty, while natural disasters continue to pose important macroeconomic risks.
The IMF underlined the need to continue prioritizing governance reforms, greater private investment, economic diversification, and resilience to climate shocks to sustain inclusive growth. It welcomed the authorities’ plan to implement gradual fiscal consolidation over the medium term, which would help reinforce fiscal space and external balance and support a growth friendly strategy.
Commercial Risk – Stable at 7
The US State Department’s latest Investment Climate report on the Philippines, published in August 2025, says the government has taken steps in recent years to improve the overall investment climate and promote economic growth.
However, the report adds that the Philippines’ complex, slow, redundant, and sometimes corrupt judicial system inhibits the timely and fair resolution of commercial disputes. Traffic in major cities and congestion in the ports remain barriers to doing business. Large, family-owned conglomerates dominate the economic landscape, sometimes crowding out smaller – or even international – businesses.
The Philippines ranks joint 120th out of 182 countries in Transparency International’s 2025 Corruption Perceptions Index – lower than the likes of Thailand, Laos, Indonesia and Vietnam – and down from 114th in 2024. According to the Philippines Corruption Report by GAN, high levels of corruption severely restrict the efficiency of businesses operating in the Philippines.
The country lies in 82nd place in terms of economic freedom, as ranked in the Heritage Foundation’s 2025 Index. The Philippines is ranked 16th out of 39 countries in the Asia-Pacific region. The country’s economic freedom score is higher than the world and regional averages. The Philippines’ economy is considered “moderately free” according to the 2025 Index.
Technology Risk – Stable at 6
The Global Innovation Index (GII), from the World Intellectual Property Organization, is an important index used by countries and multinational companies to assess innovation ecosystems and aid in policymaking and investment decisions.
The Philippines ranked 50th out of 139 countries in the 2025 GII. The Philippines ranked 11th among the 17 economies in Southeast Asia, East Asia, and Oceania, and ranked 3rd among the 37 Lower middle-income group economies.
The Philippines ranked 70th in the world for mobile speeds and 54th for fixed broadband speeds during July 2025, according to the Ookla.
Government policies
The Philippines has experienced a significant increase in the use of digital technology in several industries, primarily driven by a tech-savvy population, government policies that encourage digital adoption and investments both locally and internationally.
The Philippine Development Plan 2023-2028 specifies digital transformation as one of its underlying themes. The Philippines envisions achieving a robust digital economy to make the Philippines “globally competitive”. The goal is to bridge the “digital divide” across the archipelago, where nearly 40 percent of the country lacks reliable internet access.
The government has also recognized AI’s importance for economic growth and innovation, establishing initiatives such as the National AI Roadmap and the establishment of the National AI Research Center to foster AI adoption and research.
Infrastructure
The Philippines is currently implementing 207 Infrastructure Flagship Projects (IFP) under the “Build Better More” (BBM) program, with a total value of US$176.7 billion from 2022 to 2028, targeting 5%-6% of GDP spending. Major projects Include:
- The Metro Manila Subway Project: The country’s first subway, a $8.9 billion project with 17 stations, set for partial operations by 2027 and full completion by 2031.
- The North-South Commuter Railway project: The government’s single largest rail project, costing nearly US$16bn, is dubbed as a lasting solution to commuters’ everyday agony. It is due to be completed in 2032.
- The New Manila International Airport, also known as the Bulacan International Airport: due to be completed in 2028, the airport will be one of the world’s largest and cost around US$15bn. Total capacity is expected to reach as much as 100 million passengers per year, positioning the facility among the largest airports in Southeast Asia, when it is completed.
Education and skilled staff
The Philippines is struggling to produce enough STEM graduates to meet demand with less than a quarter of senior high school students enrolled in STEM subjects. In AI, a shortage of skilled professionals with expertise in AI, has created a talent gap that has impacted the ability of companies to develop and implement sophisticated AI solutions.
May Bulletin
Political Risk – Stable at 7
In late March 2026 President Marcos declared a “national energy emergency,” citing the “imminent danger” posed by the disruption in global oil supply, having announced just a week earlier that there was no crisis. The Philippines imports 98% of its oil from the Middle East and has been severely affected by the conflict in the Gulf. The declaration of a state of national energy emergency will enable the government to ensure the orderly movement, supply, distribution and availability of fuel, food, medicine, agricultural products and other essential goods. The emergency declaration, which will remain in force for one year, authorises the government to procure fuel and petroleum products to ensure timely and sufficient supply and, if necessary, pay part of the contract amount in advance. The government is working to procure 1 million barrels of oil from countries within and outside Southeast Asia to build its buffer stock.
The government had come under fire for its failure to respond to spiking energy prices and fuel shortages. Transport unions and Philippine senators have criticised the government’s response to the crisis, accusing the Marcos administration of lacking a unified and coordinated action to mitigate the fallout from the surge in oil prices. Transport groups held two-day nationwide transport strikes in March to call for oil price rollbacks by scrapping fuel excise taxes and the oil deregulation law.
Shoppers are also bulk buying basic essentials ahead of anticipated hikes in food prices. The current harvest season has so far tempered the impact of higher energy costs, but food prices are likely to start rising rapidly in the coming weeks, after the harvest season.
Economic Risk – Stable at 7
The economy grew by just 3% in the fourth quarter of 2025, the weakest pace since 2011, excluding the pandemic period, bringing full-year expansion to 4.4%, down from 5.6% in 2024, which was the second fastest pace in ASEAN. Fitch said the economy had been weakened by the flood corruption scandal and the subsequent slowdown in public capex disbursement.
An April report from the ASEAN+3 Macroeconomic Research Office (AMRO) anticipated a pick-up in economic growth in 2026, although it added that growth will likely remain below its estimated potential as higher oil prices from the Middle East conflict weigh on activity. It maintained its 2026 growth forecast for the country at 5.3%. However, Worldbox Business Intelligence is more sanguine, believing that higher energy and food prices will inevitably weigh on demand. We believe sub 5% growth is more likely.
AMRO argues that private investment and exports will face headwinds from external uncertainties due to the US tariff policy, while public investment will be dampened by flood control project controversies. Additionally, it says, the US tariff impact on goods exports would be negative and more pronounced in 2026, while in 2025, it was partly offset by front-loaded export orders. However, the adverse effects on investment and exports would gradually phase out in the second half of 2026 according to AMRO.
AMRO added that downside risks stem from aggressive US protectionism, tighter immigration policies for migrant workers, slower growth in key trading partners, more volatile global financial conditions, and potential inflationary pressures. It also pointed to structural challenges – such as prolonged scarring from the COVID-19 pandemic, insufficient infrastructure development, and limited manufacturing capacity – that continue to constrain the country’s potential growth over the longer term.
The central bank responded swiftly to the slowdown by cutting the key interest rate by 25 basis points in October, December and February. That left the benchmark overnight reverse repurchase rate at 4.25%. The central bank’s easing cycle began in August 2024 with a cut from 6.5% to 6.25%. AMRO believes there is little scope for further easing with price pressures expected to hit the upper range of the central bank’s tolerance band this year. AMRO upped its inflation forecast for the Philippines to 3.9% from 3.2% previously. Even as global price shocks began hitting the local economy, this revised forecast remains within the central bank’s target band of two to four percent. Inflation is also expected to normalize in 2027, easing to 3.6%.
Commercial Risk – Stable at 7
In December 2025, the IMF in its Article IV report said that overall systemic financial risks remain moderate but it encouraged close monitoring of vulnerabilities in the real estate sector, interconnectedness between banks and complex conglomerate structures, and fast-growing consumer credit including through NBFIs and digital finance. It advised the authorities to enhance the macroprudential policy framework to help pre-empt the build-up of vulnerabilities and raise buffers. The IMF also welcomed the Philippines’ successful exit from the Financial Action Task Force grey list while noting that advancing AML/CFT efforts should remain a priority.
The Philippines’ path toward an “A” credit rating may face renewed headwinds as external shocks and lingering domestic issues weigh on growth, according to Fitch Ratings, according to a report in the Business Enquirer published in March. It quoted Jeremy Zook, senior director for APAC sovereign ratings at Fitch Ratings, as saying that the economic recovery remains intact but is increasingly vulnerable to risks stemming from the Middle East conflict, particularly due to higher oil prices and their spillover effects.
Technology Risk – Stable at 6
In April, various lawmakers urged the 20th Congress to pass a Bill of Rights on Artificial Intelligence to safeguard Filipinos against fake news, algorithmic bias, and privacy violations while ensuring the country maximizes the benefits of this self-learning technology, according to the Business Mirror. The proposed legislation is outlined in House Bill (HB) No. 2827, or the “Artificial Intelligence Development and Regulation Act,” and is currently under consideration by the House Committee on Information and Communications Technology.
Environmental, Social and Governance (ESG) – Stable at 7
The United Nations’ Sustainable Development Goals (SDGs) are recognised as a beneficial framework for responsible investment. The Sustainable Development Report from Cambridge University Press assesses the progress of all UN Member States on the SDGs. It provides a useful means of ranking Southeast Asian countries on their ESG progress.
The Philippines is ranked 87 out of 167 in the 2025 report, with a score of 68.3
Environment – The Philippines faces a number of environmental challenges including flooding, air and water pollution from rapid urbanization and industrialization, deforestation and soil erosion due to logging, and a serious plastic waste crisis exacerbated by insufficient waste management systems.
Flooding has become a major political issue because of allegations that significant government funds designed to alleviate the effects of flooding and prevent flooding have been lost due to corruption. In July 2025, typhoons and seasonal monsoon downpours triggered massive floods that affected millions of people, displaced more than 300,000 others, damaged nearly 3,000 houses and left extensive infrastructure and agricultural losses. At least 26 people died.
President Marcos said in September that more than 6,000 of the 9,000 flood control projects implemented so far in his more than three years in office have inadequate or unusual specifications that should be investigated.
- Air pollution – stemming from the fact that over half of the population is dependent on the burning of fossil fuels to meet its daily energy needs. The World Health Organization says that air pollution kills around 120,000 Filipinos every year.
- Plastic pollution – around 2.7 million tons of plastic waste is generated every year. That stems from an insufficient waste-management system, coupled with a high dependence on single-use plastics.
- Marine pollution – around 20% of the plastic waste ends up in the sea. Theresa Lazaro, the country’s Foreign Affairs Undersecretary, has said that “there would be more plastics than fish by 2050, while oceans would be overheated and acidified if people fail to act now”. In recent years, the government has initiated various measures to curb marine pollution in the country.
Social – According to the US State Department, the Philippines is a signatory to all International Labor Organization core conventions but has faced challenges with enforcement. Unions allege that companies or local officials use illegal tactics to prevent workers organizing. The quasi-judicial National Labor Relations Commission reviews allegations of intimidation and discrimination in connection with union activities. Reports of forced labour in the Philippines continue, according to US officials.
Governance – Highly-concentrated corporate ownership, particularly among family-owned listed firms, undermines corporate governance, according to the Organisation for Economic Co-operation and Development (OECD). It describes the Philippines’ concentration of corporate ownership as among the highest in Asia. The Securities and Exchange Commission (SEC) has rolled out a series of reforms aimed at strengthening corporate governance standards in the Philippines.
May Bulletin
Environmental, Social and Governance (ESG) – Stable at 7
The Securities and Exchange Commission (SEC) has launched the country’s Green Equity Guidelines, the first in the Asean region. The guidelines are intended to “enhance the visibility and attractiveness” of companies that actively engage in green activities, according to the SEC. Once their application is approved, eligible companies may label their shares as green equity before the offering. Under the guidelines, more than half of a firm’s revenues and investments must be earned or directed toward green activities that meet the Philippine Sustainable Finance Taxonomy Guidelines or the Asean Taxonomy for Sustainable Finance.
Latest economic data
f forecasts
* Official figures
Source: World Bank/International Monetary Fund, December Article IV consultation, except where stated
Useful links
https://www.transparency.org/en/cpi/2021
https://www.imf.org/en/Countries/PHL
https://www.adb.org/countries/philippines/main
https://business.inquirer.net/
https://mb.com.ph/category/business/business-news/
https://fulcrum.sg/about-fulcrum/
Source: Worldbox
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