The Philippines is neither benefiting significantly from the global artificial intelligence boom nor well positioned to capture the productivity gains that wider AI adoption could bring, London-based research firm Capital Economics said in a report released this week.
Gareth Leather, senior Asia economist at Capital Economics, pointed to the country’s export performance as evidence of the gap. Philippine electronics exports have grown at a much slower pace than those of other major semiconductor exporters in the region, including Taiwan, South Korea, Singapore, and Malaysia, he said.
“Electronics exports have surged across much of Asia over the past year as firms have ramped up production and raised prices of semiconductors and other components used in AI infrastructure,” Leather said. “By contrast, the Philippines’ electronics exports are rising at a much weaker pace.”
The country also lags in AI adoption in the workplace. Capital Economics’ AI Economic Impact Index, which measures economies’ ability to innovate, adopt, and benefit from the technology, placed the Philippines 43rd out of 47 economies tracked, with a score of 21 out of 100, according to the firm’s separate February 2026 report.
That ranking put the Philippines behind every other Asian economy in the index and last among the ASEAN-5, trailing Singapore, Malaysia, Thailand, and Indonesia. The country shared the global bottom five with Mexico, South Africa, Ukraine, and Argentina.
Leather said being on the wrong side of the AI boom could prove especially costly for the Philippines, since its business process outsourcing industry, a major source of foreign exchange earnings, is among the sectors most exposed to disruption from AI. Many of the services the industry provides, including customer support, back-office administration, finance and accounting, and routine IT support, are the kinds of repetitive cognitive tasks that AI is making easier to automate.
The Information Technology and Business Process Association of the Philippines, the industry’s umbrella group, now expects sector revenues to reach between $43.3 billion and $50.5 billion by 2028. That range marks a sharp downgrade from the $59-billion target the association set when it launched its six-year roadmap in 2022.
“While AI will not eliminate these jobs overnight, even a gradual reduction in demand for call-center workers would have a major economic impact,” Leather said.
The BPO sector remains one of the country’s largest employers and dollar earners, alongside overseas Filipino worker remittances. Capital Economics did not specify a timeline for when automation-driven effects on the industry might materialize.
