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Worldbox Business Intelligence Risk Rating – September 2026
THE PHILIPPINES
Summary
Overall Risk Score
27/40 – Stable (Unchanged)
| Political risk: 7/10 – Stable (Unchanged)
Economic risk: 7/10 – Stable (Unchanged) Commercial risk: 7/10 – Stable (Unchanged) Technology risk: 6/10 – Stable (Unchanged) A country’s risk rating is based on four areas: political, economic, commercial and technological risk. Each area is scored from 1 to 10, where 1 is the highest risk and 10 is the lowest. |
ESG Risk: 7/10 – Stable (Unchanged)
Environmental, social and governance (ESG) risk is increasingly important to companies, investors and consumers across Southeast Asia. Our quarterly country risk reports therefore include a separate ESG score and analysis of each country’s environmental, social and governance performance, along with recent developments. |
Political Risk September Update
Stable at 7
The Philippines continues to try and bolster ties with allies to build up its armed forces amid simmering tensions in the South China Sea with China. It has signed a number of agreements with Japan, for example, which is also concerned about China’s growing military strength. The latest move includes establishment of a new body involving key officials from the Philippines and Japan, which will help pave the way for an “early transfer” of used warships to Manila. The new working group is part of a wide-ranging framework to further promote defence equipment and technology cooperation. The transfer of equipment will include Abukuma-class destroyers and TC-90 aircraft, which are used to conduct maritime patrols, as well as other defence equipment. Japan is also exploring the possibility of selling missile defence systems and submarines to the Philippines.
Manila has also stepped up its military ties with the US, which has expanded its military bases in the country. The Philippines is continuing to negotiate on the price tag of $5.58 billion for 20 F-16 fighter jets from Lockheed Martin. The deal has already been approved by the State Department. Manila is also considering other options and is in discussions for Saab’s JAS Gripen E/F, Leonardo’s Eurofighter Typhoons, and Korea Aerospace Industry’s new KF-21 Boramae. The acquisition of any of these jets would significantly enhance the Philippines defence capabilities.
Political Risk – Context
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.
In May, the Philippine House of Representatives voted to impeach Vice President Sara Duterte for the second time in two years, in a major blow to her 2028 presidential ambitions. Duterte had been the leading contender to replace Marcos Junior, according to opinion polls, as president in 2028, when the next presidential election will be held. Marcos is limited by the constitution to a single six-year term.
The impeachment process will now move to the Senate for trial, where if convicted, Duterte, the daughter of former President Rodrigo Duterte, will be disqualified from holding public office for life. Duterte is alleged to have misused public funds and made public threats against Marcos, his wife and his cousin, the former House speaker. Duterte formed an alliance with Marcos and ran for vice-president in the 2022 elections. The Dutertes have significant support in the upper house and Worldbox Business Intelligence believes it may be possible for Duterte to win the backing of sufficient senators to avoid impeachment.
Economic Risk September Update
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. The economy grew by a lower than expected 2.8% in the first quarter, constrained by the crisis in the Middle East and a delayed budget passage.
Increases in transport fuel prices in the island country has caused monthly inflation to jump. Core inflation, which excludes food and energy prices, inched up to 4.1% in May from the 3.9% recorded the previous month. The numbers exceeded the central bank’s annual inflation target of 2% to 4%, and it expects inflation to breach its full-year target for 2026 and 2027. Inflation is expected to average 6.4% in 2026, 4.5% by 2027 and 3.1% by 2028, the central bank forecasts.
The government is stepping up efforts to address the impact of the Middle East conflict and will continue to push for reforms to boost economic growth. The reforms are designed to improve transparency, accountability, and efficiency in government services. It has also directed implementing agencies to accelerate the execution of high-impact infrastructure projects.
The central bank has embarked on a rate-hiking cycle to combat the impact of the Middle East conflict on inflation. In August it raised its main interest rate by 25 basis points for the third time in four months, bringing the overnight repurchase rate up to 5%. Further hikes may follow although interest rates could be swiftly cut thereafter – if the peace deal in the Middle East is maintained – in order to offset weakness in the economy.
An April report from the ASEAN+3 Macroeconomic Research Office (AMRO)also 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.
Economic Risk – Context
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 urbanisation, 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 prioritising 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.
The Middle East conflict has exposed structural problems in the economy, according to Malaysian Professor Dato Dr Ahmad Ibrahim. Writing in Business Today, the professor warned that if the country does not undertake a radical restructuring of its economic architecture, it will remain perpetually vulnerable – not just to oil price spikes, but to the cascading failures that follow. The professor explained that: “the Philippines suffers from a unique paradox: it has among the highest electricity rates in the region, yet it cannot guarantee supply security. The power grid is a patchwork of ageing, imported fossil fuel plants, heavily dependent on coal and natural gas.” He adds that “when global crude prices surge, the cost of imported coal and oil drags the entire economy into inflationary quicksand”… and that “when energy prices spike, the central bank raises rates to defend the peso, choking small and medium enterprises (SMEs), the real job creators. The result is a cycle of stagflationary pressure that hurts the poor most.” Worldbox Business Intelligence believes this is exactly the scenario that is currently playing out.
Commercial Risk September Update
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 Non-Bank Financial Institutions (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.
Fitch Ratings has revised the Outlook on the Philippines Long-Term Foreign-Currency Issuer Default Rating (IDR) to Negative from Stable and affirmed the IDR at ‘BBB’. The agency said that the move reflected rising risks to the Philippines’ strong medium-term growth prospects from recent disruptions to public investment, exacerbated in the near-term by elevated exposure to the ongoing global energy shock. The agency added that these challenges could narrow the country’s GDP growth outperformance relative to peers, amid higher post-pandemic government debt and a gradual and sustained deterioration in its external finance position.
Commercial Risk – Context
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 77th place in terms of economic freedom, as ranked in the Heritage Foundation’s 2026 Index, up from 82nd place in the previous year. The Philippines is ranked 14th 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 2026 Index. The Foundation said that the improvement in 2026 was driven by legislative reforms, though the nation still faces challenges with corruption and weak rule of law.
Technology Risk September Update
Stable at 6
The US has reached an agreement with the Philippines to establish a high-tech industrial hub in what the Wall Street Journal described as “the Trump administration’s latest effort to lessen China’s dominance over global supply chains”. The AI-powered manufacturing hub is planned for a 4,000-acre site given to the US by Manila. The US will occupy the site rent-free and administer it as a special economic zone. American companies that set up in the zone will gain access to essential inputs such as critical minerals that bypass Beijing’s control. The Wall Street Journal reported that the hub will have diplomatic immunity, such as the protections afforded to an American embassy, and operate under US common law – the first arrangement of its kind anywhere in the world. The two-year lease is renewable for 99 years.
Technology Risk – Context
The Global Innovation Index (GII), from the World Intellectual Property Organisation, 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, down from 50th place in 2020. 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 recognised 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) programme, 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, 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.
Education and skilled staff
A report from the Second Congressional Commission on Education (EDCOM 2) entitled, “Turning Point: A Decade of Necessary Reforms”, makes for grim reading. It finds that the educational system has been in decay for decades, to the extent that roughly nine out of 10 Filipino 10-year-olds struggle to read and understand a simple text. The report introduces the National Education and Workforce Development Plan (NatPlan) 2026–2035, a ten-year roadmap aimed at resolving the Philippine educational crisis.
Environmental, Social and Governance (ESG) September Update
Stable at 7
The Philippines and Singapore have signed a carbon trading agreement that allows both countries to share verified emissions reductions, a move expected to boost climate investment. The deal, signed during ASEAN Climate Week, creates a framework under the Paris Agreement for transferring carbon credits between the two countries. In a separate development, TotalEnergies of France and the renewable energy developer Nextnorth have launched a 440 MW solar power project in the Philippines. Around US$300 million was raised to finance the project from three Japanese banks, the largest international financing for a solar project in the Philippines to date.
Environmental, Social and Governance (ESG) – Context
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 is one of the world’s most vulnerable nations to climate change, according to the OECD. The country faces severe risks from intensifying typhoons, sea-level rises – occurring at triple the global average – and extreme heat. The country faces potential 6% annual GDP losses by 2100 if risks are ignored. Adaptation, including infrastructure resilience and coastal protection, is key to overcoming these threats. The OECD adds that the government is taking measures to mitigate the impact of climate change. It is, for example, investing in adaptation measures, acknowledging that this will remain necessary over the long term. At the same time, the Philippines is contributing to the global climate mitigation agenda, aiming to increase the share of renewable energy in the electricity generation mix from 21% presently to 35% by 2030 and 50% by 2040.
Social
The Labor Code of the Philippines contains a framework of employee rights designed to ensure fair treatment of workers in the private sector. This includes setting standards for pay rates, working hours, and paid time off for businesses that employ talent in the Philippines. Key rights include an 8-hour workday, overtime pay, 105 days paid maternity leave, 7 days paternity leave, and the right to self-organization/unions. Termination must be for just cause and follow due process. Failure to comply with Filipino employment laws can result in severe consequences, such as hefty fines and even imprisonment.
Governance
According to the law firm Aureada CPA, the SEC’s corporate governance framework for listed and public companies is built around transparency, accountability, fairness, and responsibility. For publicly-listed companies, the SEC’s governance regime uses a “comply or explain” approach, which means companies are expected either to follow recommended practices or clearly explain why they are taking a different approach. Concentrated corporate ownership, particularly among family owned listed firms, undermines corporate governance, according to the OECD.
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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