The Asian Development Bank (ADB) has downgraded its growth forecast for the Philippine economy for this year and in 2026, contrasting with its upward revisions for the rest of developing Asia. The Manila-based regional lender cited reduced public infrastructure spending following investigations into controversial flood-control projects as a key drag on economic momentum.
In its latest Asian Development Outlook, the ADB projects Philippine gross domestic product to expand 5.0 percent this year and 5.3 percent in 2026, down from 5.7 percent in 2024. These figures also represent a downgrade from the September edition, which had forecast growth of 5.6 percent and 5.7 percent for 2025 and 2026, respectively. The bank noted that GDP growth slowed to 4.0 percent in the third quarter and averaged 5.0 percent for the year up to that period, reflecting lower government spending on flood-control projects amid tighter oversight.
Despite weaker public spending, private construction activity remained resilient, while October’s purchasing managers’ indices pointed to expansion in services (50.8) and retail/wholesale (51.3). Manufacturing, however, contracted, with the S&P Global PMI falling to 47.4 in November from 50.1 in October, though firms expect higher output over the next 12 months.
Household consumption moderated but remained supported by low unemployment at 3.8 percent in September, and steady remittances. Low inflation, at 1.7 percent for the first 10 months, and ongoing monetary easing are expected to sustain domestic demand, with inflation projected to rise to 3.0 percent in 2026 due to higher electricity rates and base effects.
By contrast, the ADB raised growth projections for developing Asia to 5.1 percent in 2025, driven by robust domestic demand in India and strong exports in high-income technology-exporting economies. Southeast Asia’s growth is now expected at 4.5 percent this year and 4.4 percent in 2026, reflecting stronger external conditions and supportive public spending.
The ADB highlighted downside risks for the Philippines, including uncertainties from public infrastructure investigations and potential weather-related disruptions, which could temper the country’s recovery.
