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Worldbox Business Intelligence Risk Rating – February 2026
THE PHILIPPINES
Summary
| Overall Risk Score 27/40 (Downgrade)
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 – Downgrade from 8 to 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. The son of former dictator Ferdinand Marcos, who ruled the country from 1965 to 1986. In November 2025, Marcos’ approval ratings fell to its lowest level since he took office with just 21% of Filipinos approving of his rule. Vice-President Duterte’s popularity is also under pressure, her approval rating declining to 43% from her August 2025 rating of 47%.
The decline is likely linked to claims Marcos and his allies took kickbacks from infrastructure projects. The claims prompted a large protest rally in Manila in November, demanding Marcos’ resignation. The rally marked the latest display of public anger over the “Trillion-Peso” scandal, in which politicians are accused of pocketing billions of pesos in bribes for contracts on flood-control infrastructure that ended up being defective or were never built at all.
Two cabinet ministers have resigned over the scandal, while local media reports that a former lawmaker accused in the case, Zaldy Co, has alleged that Marcos directed him to add US$1.7bn to the budget for “dubious public works” while he headed an appropriations committee. The president has denied the claims. Duterte is facing separate allegations over the misuse of government funds.
The Finance Secretary told lawmakers in September that up to US$2bn for flood control projects may have been lost to corruption since 2023. Extensive damage from powerful typhoons, which killed more than 250 people, has spurred public outrage.
Marcos has reacted by making changes in his Cabinet and issuing an appeal to Congress to pass bold reforms like livestreaming the budget deliberations and legislating an anti-political dynasty measure, according to the Diplomat.
The publication adds that the latter measure has the potential to become a game-changer in Philippine politics because it could, in theory, disqualify incumbent officials from running for public office again, including members of the Marcos and Duterte families.
The Diplomat says that the involvement of elected officials in the large-scale corruption has also fuelled fears about the military taking action, although this was immediately disputed by the presidential palace and the military top brass. Earlier this month, Marcos raised the base pay of soldiers and uniformed personnel, which could be intended to pre-empt destabilization and recruitment efforts in the security sector, adds the Diplomat.
The Diplomat warns that 2026 is likely to prove challenging to Marcos and there are doubts about whether he can complete his terms which will finish in 2028. That’s because the corruption allegations against Marcos and his subordinates can either lead to the filing of an impeachment complaint against him or the further weakening of his presidency. It adds that Opposition forces are expected to mobilize more protests to demand the prosecution of corrupt officials and the implementation of bold reforms in governance.
The increasingly uncertain political outlook has caused Worldbox Business Intelligence to downgrade its political risk rating.
Meanwhile the political battle between Sara Duterte and Marcos continues. Late last year, the lower house of Congress, which is controlled by Marcos’ loyalists, filed a petition to impeach Ms Duterte. However, in July, the Supreme Court blocked an impeachment trial against Duterte. The ruling means Duterte has been granted a reprieve from possible ousting, at least until February 2026. An impeachment trial would have prevented Duterte from running for the 2028 presidency, which Marcos cannot contest due to a single-term limit for Philippine presidents.
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. Marcos’ decision to break with the Dutertes carries risks. The latter enjoy strong popular support in the south, and among the millions of overseas Filipino workers. Duterte has accused the government of surrendering her father to “foreign powers” and of violating Filipino sovereignty.
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 ASEAN+3 Macroeconomic Research Office’s (AMRO) annual assessment of the economy proved positive. AMRO reported that the economy continues to grow at a steady pace, though slower than the pre-COVID trend. It adds that strong domestic consumption and a stable labour market are driving growth, while inflation has eased below the central bank’s target range. Meanwhile, global trade tensions have had a limited impact, thanks to the economy’s domestically-oriented structure and diversified export markets.
Amro warned that the economic outlook is clouded by external uncertainties. Downside risks include aggressive US protectionist policies, slower growth in key trading partners, tighter global financial conditions, and the possibility of renewed inflationary pressures. It also pinpointed structural challenges – such as lingering pandemic scarring, insufficient infrastructure development, and limited manufacturing capacity – that continue to constrain potential growth.
AMRO said that to bolster resilience against climate and disaster shocks, raise competitiveness, and enhance long-term growth potential, the Philippines should refine its growth strategy with streamlined targets and a well-established performance evaluation framework for public spending. It added that “to embrace the rapid advancement of AI, the authorities should prioritize upgrading sectors with comparative advantages, improving the business environment, continuing upskilling and re-skilling of labor, and encouraging private investment.”
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 114th out of 180 countries in Transparency International’s 2024 Corruption Perceptions Index – lower than the likes of Thailand, Indonesia and Vietnam. 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 government has launched a National Fiber Backbone project aimed at building a cable network across the archipelago. Upon completion in 2026, the project should increase the broadband penetration rate nationally from 33% to 65% and reach 70 million out of the current 115 million population nationwide. It is also hoped the project will lower the price of internet connectivity.
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.
February Bulletin
Political Risk – Downgrade from 8 to 7
The Japanese financial giant MUFG Bank Ltd. said in December that investors have turned pessimistic following heightened political risks, but the relative strength of the Philippine peso is buoying sentiment.
The strength of the peso is helping to contain imported inflation and lower the potential impact of rising prices on an already angry populace. Inflation eased to 1.6% in the first 11 months of 2025, down from 3.4% in 2024, continuing a steady decline from 5.8% in 2022 and 6.0% in 2023.
The government was quick to take credit for the easing with Executive Secretary Ralph Recto saying the sharp slowdown in inflation reflects decisive government action to stabilize prices, secure food supply, and protect household purchasing power, particularly for rice, which accounts for the largest share of spending among low-income families.
Economic Risk – Stable at 7
The economy grew by around 5.6% in 2024 – the second fastest pace in ASEAN – largely driven by private consumption. Services and industry remained the main drivers of growth in sectoral terms, expanding by 6.7% and 5.6%, respectively. Construction also had a robust full-year growth performance of 10.3%, manufacturing rebounded.
The economy continued to perform well in the first of 2025. However, third-quarter GDP growth disappointed at 4.0% and the economy is facing various headwinds that are likely to slow growth further in the final quarter and potentially into 2026. Forecasters such as ING have downgraded projections for 2026 to under 5% growth.
A significant weakening of domestic demand caused third-quarter growth to slow sharply to 4.0% year-on-year, falling short of consensus by nearly 1 percentage point. Domestic demand weakened significantly with investments contributing almost nothing to growth, while government spending added only 0.8pp, down from 1.5pp in the second quarter. Private consumption growth also eased compared to the first quarter. More positively, exports accelerated, rising by 7.0% on an annual basis in the third quarter versus 4.7% previously, and accounting for roughly half of overall growth.
Two main factors continued the growth slowdown. Corruption scandals put government spending under intense scrutiny, leading to a sharp pullback in investments. This was evident in weaker public capex, reduced construction activity, and dampening private sector sentiment, explains ING.
In addition, tariff uncertainty further delayed investment decisions. Initially, the Philippines appeared to benefit from tariffs with a relatively lower rate of 17% announced on Trump’s ‘Liberation Day’. However, the rate was raised to 19% in July 2025, aligning with the rest of ASEAN, erasing the country’s tariff advantage.
FLASH – With the US Supreme Court ruling on tariffs, issued on 19 February 2026 the developments todate with Tariffs on many countries will be impacted. The Trump Administration issued a proclamation to impose a 10% Global Tariff – using an alternative law, Section 122 of the 1974 Trade Act. This was subsequently increased to 15%. This will only hold up for 150 days since the regulations require ratification by Congress.
The present tariff rates in SE Asia will be overall reduced.
Worldbox Business Intelligence is of the opinion that the turmoil will continue.
ING believes the figures raise concerns that soft government spending could become a longer-term drag, weighing not only on fiscal outlays but also on business and private sector sentiment. The Business Outlook Survey reinforces this caution: the 12-month all-industry confidence indicator fell to its lowest level since 2022 in the third quarter, with respondents most pessimistic about construction and real estate. ING also warns that the export strength may prove temporary as the full impact of higher tariffs takes hold, eroding competitiveness.
The central bank responded swiftly to the slowdown by cutting the key interest rate by 25 basis points in October and December. That left the benchmark overnight reverse repurchase rate at 4.5%. The central bank’s easing cycle began in August 2024 with a cut from 6.5% to 6.25%.
Commercial Risk – Stable at 7
In November 2025, Fitch warned that political instability poses a ‘significant risk’ to the Philippines’ credit rating. The agency explained that escalating anti-graft drive had unsettled businesses and slowed growth. It warned that sustained social unrest could undermine governments’ fiscal and economic strength through disrupted activity, weaker revenue collections and pressure on public spending. The Philippines currently holds a triple-B rating from Fitch—above the minimum investment grade—with a “stable” outlook, signalling that any adjustment is unlikely in the near term.
However, in November S&P Global Ratings affirmed its ‘BBB+’ long-term and ‘A-2’ short-term sovereign credit ratings on the Philippines. The outlook on the long-term rating remains positive. It added that a slowdown in public infrastructure investment in the Philippines is weighing on its near-term growth prospects. However, the ratings agency added that it believes this is temporary and economic growth prospects remain strong.
Technology Risk – Stable at 6
The Philippine Institute for Development Studies said in December 2025 that Artificial intelligence could help crack down on corruption in the Philippines, but weak institutions and risks of misuse remain major obstacles. The state-run think tank said AI can be trained to detect illicit financial flows, identify rigged bidding in public procurement, and detect networks of corrupt actors.
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.
February 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
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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