Philippines seen as second-fastest growing SE Asia economy to 2035

The Philippines is projected to be Southeast Asia's second fastest-growing major economy, with average annual GDP growth of 5.8% from 2026 to 2035, according to a Bain & Company, DBS Group Holdings and Vriens & Partners report. Only Vietnam, at 6.2%, is expected to grow faster among the six major re

The Philippines is projected to be Southeast Asia's second fastest-growing major economy over the next decade, with gross domestic product (GDP) expanding by an average of 5.8% annually from 2026 to 2035, according to the Southeast Asia Outlook 2026-2035 report by Bain & Company, DBS Group Holdings and Vriens & Partners.

The report, released on Wednesday, said the Philippines would trail only Vietnam, which is forecast to grow by an average of 6.2% a year through 2035. The Philippine economy is expected to outpace Indonesia (5.4%), Malaysia (4.3%), Singapore (2.7%) and Thailand (2.2%).

“The Philippines, which has a favorable demographic tailwind, could grow at a 5.8% average annual rate as consumption, infrastructure, and governance reforms unlock investment,” the report said. The projected 10-year growth is above the 4.8% average for the six Southeast Asian economies covered.

The regional forecast is slower than the earlier average expansion of 5.1% for the 2024-2034 period, reflecting a more complex and volatile global environment. The Philippine economy is currently experiencing a sharp slowdown, averaging 2.6% growth in the first half of this year. The government is targeting 3.5%-4.5% GDP growth for 2026 and 5%-6% annually from 2027 to 2030.

Despite its relatively strong baseline forecast, the Philippines is among the Southeast Asian economies with the greatest downside exposure, the report said. Indonesia, the Philippines and Thailand would be most exposed under a downside scenario because of their “capital-flow sensitivities, energy dependence, political uncertainty, and weaker structural momentum.”

Under more favorable global conditions, the Philippines could also capture less upside than Malaysia, Singapore and Vietnam, which are better positioned to benefit from their roles in capital intermediation and global manufacturing supply chains. “Indonesia, Thailand, and the Philippines see more limited benefit, as persistent structural constraints limit their ability to translate an improved external environment into stronger growth,” the report said.

The report said the Philippines’ favorable demographics, steady remittance inflows and consumption-led economic model provide some insulation from disruptions to global trade. However, dependence on imported energy, weak policy implementation and artificial intelligence (AI)-driven disruption to the outsourcing industry could prevent the economy from reaching its full potential. “Without stronger energy security and governance consistency, growth could be capped below the Philippines’ potential,” it said.