The World Bank slashed its economic growth forecast for the Philippines this year to 5.3 percent and 5.4 percent in 2026 due to possible weaker global demand for goods and services.

In October last year, the global institution had estimated 6 percent for this year and 6.1 percent in the next.

In the World Bank’s East Asia and The Pacific (EAP) Economic Update report released Friday, its analysts said China could slow regional growth as Chinese private consumption remained weak.

“A large part of foreign direct investment inflows in most EAP economies is from China, followed by ASEAN and Japan,” World Bank said.

China’s economy is seen to grow slower by 4 percent until next year from initial estimates of 4.8 percent this year and 4.3 percent in 2026 amid threats of Trump’s tariffs of up to 125 percent.

The World Bank said demand for real estate in China has yet to rise as a strong signal that local businesses and households are regaining higher financial freedom.

Consumption still low

The World Bank said the Philippines’ private consumption has also remained below pre-pandemic levels despite declining interest rates.

Specifically, household consumption in the fourth quarter last year grew by 4.7 percent, slower than the 5.3 percent in the same period in 2018 despite the Christmas activities, according to the Philippine Statistics Authority.

The World Bank said central banks in EAP economies will likely delay bigger policy rate cuts for lenders as they strive to attract more foreign direct investments and maintain healthy foreign exchange rates.

“Rising interest rates in the US and fears of capital outflows reduced the monetary space for deeper rate cuts starting in 2023,” the global institution said.

To minimize economic losses, World Bank for East Asia and Pacific Vice President Manuela Ferro said the Philippines must use technologies to spur job opportunities, especially in the clean power and minerals sectors.