Publication: Philippines Economic Update, December 2025: Growth Corridors - Pathways Out of Poverty
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2025-12-10
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2025-12-16
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The global economy performed better than expected in 2025. Despite high economic policy uncertainty, the global economy’s performance was resilient, supported by continued growth of merchandise trade and investment in technology-related sectors. Still, global growth remained below pre-pandemic levels. Commodity prices moderated, and global financial conditions eased, supporting currency appreciation in emerging markets and developing economies (EMDEs). Industry’s contribution to growth fell while services remained the dominant driver of the expansion. The Philippine local governments demonstrate promising economic potential but experience financial and institutional challenges in realizing them. To build a middle-class economy consistent with Philippines’ national ambition, the next wave of reforms must focus on creating more and better jobs everywhere by leveraging the potential of urban growth corridors and supporting local service delivery. Urban-led growth corridors can serve as the spatial engines of this transformation, but only with foundational reforms and investments that create an enabling environment, notably (i) connectivity investments can tackle the most binding gaps, (ii) transport and logistics market barriers are lowered, and (iii) Local Government Unit (LGU) financial and institutional capacity is strengthened to deliver results. Four concretes, mutually reinforcing, actions can move the agenda forward. First, complete the backbone connectivity that links urban corridors within and between island groups for greater spatial integration and job creation. Second, drive investment and cut logistics costs by lowering market barriers and slashing red tape. Third, modernize LGU public-financial management so local governments can mobilize and target resources effectively. Fourth, strengthen the regional mechanisms to implement regional and corridor development plans.
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“World Bank. 2025. Philippines Economic Update, December 2025: Growth Corridors - Pathways Out of Poverty. © World Bank. http://hdl.handle.net/10986/44081 License: CC BY-NC 3.0 IGO.”
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