The Philippines may have edged up in the latest global competitiveness rankings, but the country remains among the weakest in Asia, underscoring its chronic difficulty in turning reform rhetoric into real, sustained economic gains.

In the 2025 IMD World Competitiveness Yearbook, released by the Switzerland-based International Institute for Management Development (IMD), the Philippines rose slightly to 51st out of 69 economies, improving by one spot from 2024. But the marginal progress offers little comfort: the country still ranks last in Southeast Asia, and second-lowest in the entire Asia-Pacific region, ahead only of Mongolia.

The IMD defines competitiveness as a nation’s ability to generate long-term value through sound economic performance, government and business efficiency, and infrastructure quality. While the Philippines posted improvements in some areas, neighboring economies have advanced at a far more decisive pace, widening the regional gap.

The country’s economic performance was the lone bright spot, jumping seven places to 33rd, driven by solid GDP growth, resilient employment, and a robust rebound in exports and foreign direct investment. However, this momentum was not mirrored across other key pillars.

Government efficiency slipped to 51st from 49th, weighed down by weak public finance, poor institutional frameworks, and lagging regulatory enforcement. Business efficiency declined to 46th from 43rd, with the report citing continued concerns over labor productivity, entrepreneurship, and management practices.

Infrastructure improved marginally to 60th from 61st, but the Philippines remains near the bottom globally in all related subcategories – including basic infrastructure, technological readiness, scientific capabilities, health and environment, and especially education, which IMD flagged as a serious drag on national competitiveness.

Findings from the Anti-Red Tape Authority (ARTA) support the report’s assessment. Internal audits show that the Philippines continues to struggle with startup bottlenecks, cumbersome approval processes, and low scores in rule-of-law and regulatory quality – all of which weigh heavily on ease of doing business, despite recent executive orders to streamline procedures and fast-track infrastructure and energy projects.

While the Philippines treads water, its ASEAN peers are rapidly pulling ahead.

Malaysia posted one of the biggest jumps in the 2025 index, climbing 11 spots to 23rd, a performance attributed to successful digital governance reforms, expanded infrastructure investment, and improved investor confidence. Thailand, meanwhile, slipped to 30th from 25th, reflecting concerns over business confidence and institutional weaknesses. Indonesia also dropped 13 places to 40th, yet still outranks the Philippines by a wide margin. Singapore continues to set the regional standard, maintaining its 2nd place globally thanks to sustained excellence in innovation, education, and infrastructure.

The IMD report flagged several structural risks facing the Philippines: stubborn inflation, a persistent mismatch between workforce skills and industry needs, and an underdeveloped innovation ecosystem. Without faster, deeper reforms – particularly in bureaucratic efficiency, infrastructure delivery, and institutional strengthening – the country risks being left further behind in an increasingly competitive Asia-Pacific landscape.

The IMD index draws from over 262 indicators, blending hard economic data with executive perception surveys. In this year's survey, executives in the Philippines expressed lower confidence in regulatory quality, talent competitiveness, and public-sector effectiveness.

As the region accelerates toward more agile, innovation-driven economies, the Philippines once again faces a familiar crossroads: reform with urgency, or be left behind.