The next move: Reshaping strategy through AI

(First of two parts)

IN BRIEF:

• Measured optimism defines 2026 as CEOs balance domestic confidence with global uncertainty and rising cost pressures.

• AI readiness becomes the decisive priority, with national assessments highlighting both urgency and opportunity for Philippine enterprises.

• The advantage goes to the prepared enterprises that upgrade systems, invest in skills, and build digital strength to lead the next wave of growth.

With 2026 reshaping competitive realities at unprecedented speed, Philippine CEOs face a strategic landscape where decisions carry amplified impact. Insights from the Philippine edition of the 2026 CEO Outlook Pulse Survey, gathered from CEOs across the country’s major sectors, reveal how enterprises are rebalancing portfolios, accelerating AI integration, and strengthening resilience amid ongoing uncertainty.

In today’s NAVI world, where change is nonlinear, accelerated, volatile and interconnected, these insights offer Philippine business leaders a sharp lens into how organizations are adapting to rapid and interconnected change. AI readiness is no longer optional — it is the defining advantage for Philippine enterprises in 2026, and it is rapidly becoming the differentiator that sets industry leaders apart.

ECONOMIC PRESSURES RESHAPING CEO PRIORITIES
Philippine CEOs enter 2026 facing economic pressures that mirror those of the previous year, now intensified by geopolitical dynamics and accelerating technological change. The World Uncertainty Index indicates that global uncertainty remains elevated due to persistent geopolitical tensions and volatile trade policies — conditions that continue to affect cost structures, capital allocation, and long‑term planning.

Domestically, concerns around fiscal governance persist, weighing on investor confidence and contributing to a more cautious business outlook.

These combined forces have shaped the country’s recent economic performance. Philippine GDP slowed from 5.7% in 2024 to 4.4% in 2025, falling short of the government’s minimum target of 5.5%, as noted in the Development Budget Coordination Committee’s review of medium‑term macroeconomic assumptions.

Meanwhile, the Bangko Sentral ng Pilipinas, in its February 2026 briefing, projected a modest recovery to 4.6% in 2026 and 5.9% in 2027 — projections that hinge on strengthened governance and renewed investor trust.

While the macroeconomic environment remains constrained, the technology landscape is advancing at a pace that demands CEO‑level attention. Global competition is accelerating investment in artificial intelligence (AI), creating meaningful openings for economies that modernize quickly — and exposing vulnerabilities in those that lag.

AI READINESS AND STRUCTURAL GAPS
The 2025 UNESCO AI Readiness Assessment Report notes that the Philippines has made real progress in building responsible, ethics‑driven AI governance. Yet the same assessment underscores structural gaps that now carry strategic consequences: weaknesses in digital infrastructure, limited R&D investment, siloed policymaking, inconsistent public–private collaboration, and shortages in critical technology skills. As AI becomes a core driver of competitiveness, these gaps must be addressed with urgency.

Reinforcing this, the 2025 Government AI Readiness Index by Oxford Insights ranks the Philippines 43^rd among 195 economies, reflecting improved policy direction, governance, and public‑sector readiness. For enterprise leaders, this signals that government has largely set the foundation; the real challenge now lies in execution, specifically, scaling AI with speed, discipline, and measurable business outcomes.

One of the speakers at the 2026 Philippine CEO Outlook event from the Asian Development Bank underscored the scale of the country’s AI opportunity. Citing Public First’s Turbocharging Growth: The Philippines’ AI Opportunity, they highlighted that today’s AI technologies could significantly augment roughly 37% of Filipino workers, driving substantial productivity gains and enabling higher incomes. The message to CEOs is direct: AI is no longer merely an operational enhancement — it is a national productivity catalyst.

Global insights further reinforce the urgency of enterprise‑level action. The World Economic Forum’s Future of Jobs Report 2025 identifies AI and information technologies as the strongest forces reshaping business models worldwide, while Microsoft’s Work Trend Index 2025 notes that although awareness of AI is rising, many organizations remain underprepared for transformation at scale.

This readiness gap is even more pronounced in the Philippines. The Philippine Institute for Development Studies (PIDS), in its 2024 study Readiness for AI Adoption of Philippine Business and Industry, found that only 14.9% of firms are currently using AI, with adoption concentrated among digitally mature ICT and BPO organizations.

PIDS emphasized that industry‑wide AI uptake continues to be limited by infrastructure gaps, low levels of awareness, constrained investment capacity, and widespread shortages in critical digital skills. The study also cited the Salesforce Asia Pacific AI Readiness Index, where the Philippines scored 25.4 out of 100 in Business AI Readiness — ranking 10^th out of 12 economies, well behind regional leaders such as Singapore, China, and South Korea.

This signals a substantial opportunity for Philippine enterprises to accelerate AI capability and strengthen their competitive position in the region. As highlighted by the Global Consulting Markets Leader at Ernst & Young during the 2026 Philippine CEO Outlook event, AI offers a genuine productivity leapfrog opportunity for companies that act decisively. He underscored that realizing this potential will depend on CEOs modernizing legacy systems and rethinking enterprise capabilities to overcome entrenched barriers that hinder transformation.

PHILIPPINE CEOS ENTER 2026 WITH MEASURED OPTIMISM
The CEO Outlook Pulse Survey shows that Philippine business leaders enter 2026 with measured optimism. While 48% express net optimism about business prospects, sentiment remains nuanced. Leaders retain confidence in domestic and sector‑specific performance yet remain cautious about global conditions and persistent cost pressures. The 2026 CEO Confidence Index registered a score of 59, down from 74 the previous year — a reflection of sourcing challenges, rising operational costs, and continuing uncertainty. Even with this softer sentiment, CEOs still anticipate improvements across key metrics: 64% expect revenue growth, 54% foresee stronger profitability, and 64% project productivity gains, with 26% pointing to meaningful efficiency improvements.

Executives remain confident but deliberate in capital deployment. Net optimism of 46% for revenue, 42% for competitiveness, and 36% for investment in existing operations signals a clear emphasis on strengthening core capabilities. Expansion plans, technology investments, and R&D spending are being paced with greater discipline, shaped by pressures around input costs, limited cost‑through mechanisms, and tighter cash flow.

Cost pressures continue to loom large, with 42% of CEOs expecting operating expenses to rise due to supply‑chain disruptions, higher input prices, and labor market tightening. Leaders are accelerating efficiency, digital adoption, and reskilling to manage cost pressures and reinforce organizational resilience.

CLEAR-SIGHTED AND TRANSFORMATIVE LEADERSHIP
This direction aligns with the International Monetary Fund’s view in Gen‑AI: Artificial Intelligence and the Future of Work, which notes that economies with strong digital foundations and adaptable labor markets are best positioned to benefit from AI while managing disruption. The Philippines’ ASEAN Chairmanship in 2026 further amplifies this opportunity, positioning the country to help shape regional digital priorities that will define the operating environment for CEOs in the years ahead.

As Philippine CEOs move through 2026, the realities of a NAVI world demand leadership that is clear-sighted and transformative. This moment is both a signal and mandate: business leaders who modernize core systems, build future-ready talent, and strengthen digital foundations will be best positioned to turn uncertainty into advantage — driving growth while advancing the country’s competitiveness in a rapidly shifting region.

The second part of this article will discuss how Philippine CEOs in 2026 are advancing transformation agendas focused on modernization, AI integration, governance, and strategic transactions to sustain growth and competitiveness amid a rapidly digitalizing and geopolitically shifting market.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the authors and do not necessarily represent the views of SGV & Co

Noel P. Rabaja is the deputy managing partner, strategy and transactions leader, and markets leader, and Christine Rose L. Lapada is a strategy and transactions associate director, both of SGV & Co.