2026 was meant to be the Philippines’ year—yet the country remains stuck in an ‘recurring cycle of underachievement’

When the Philippines took over from Malaysia as chair of the Association of Southeast Asian Nations (ASEAN), expectations ran high that the country could use its one-year term to attract investment and catch up with the more successful neighbors driving the region’s growth story. 

With two months left in 2026, those hopes have been dashed. The country has been Southeast Asia’s worst-hit by high energy prices since the U.S.-Iran war began in February. 

“For decades, the Philippines has been described as a country of enormous promise. It has a young population, a large domestic market, a strategic location, and a highly capable workforce,” Ruben Carlo Asuncion, chief economist of the Union Bank of the Philippines, says. “Yet it has often struggled to convert these advantages into sustained gains in investment, productivity, and competitiveness.”

He notes that the start of 2026 brought expectations for strong growth supported by easing inflation, lower interest rates, resilient household spending, and infrastructure investment. “Instead, the economy faced a series of shocks that slowed momentum and reignited inflation pressures,” he says.

What was meant to be a breakout year, highlighted by the Philippines’ turn as ASEAN chair, has instead become a case study in how the country keeps falling short: its structural advantages are outweighed by corruption, institutional dysfunction, and energy insecurity. 

Some of the Philippines’ woes—particularly energy prices—are out of the country’s control, and may ease in 2027. In fact, the World Bank expects a rebound to 5.2% in 2027, on higher public spending and easing inflation.

Even so, Asuncion sees larger challenges ahead. “The more important question is whether the country can finally break free from its recurring cycle of underachievement.”

Middle-income status a ‘milestone, not a destination’

Peter L. U, dean of economics at the University of Asia and the Pacific in Manila, says the university’s early forecasts put GDP growth above 5% this year, similar to the World Bank’s estimates.

However, high oil prices and cuts in public........

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