The Asian Development Bank (ADB) cut its 2025 growth forecast for the Philippines to 5.6 percent from a previous estimate of 6.0 percent. This revision aligns with the bank’s general downgrade of its outlook for developing Asian economies this year.
In its Asian Development Outlook (ADO) July 2025, released on Tuesday, the ADB also reduced the 2026 growth forecast for the Philippines to 5.8 percent from 6.1 percent, citing external headwinds.
The report noted that the Philippines’ gross domestic product (GDP) growth in the first quarter was lower than expected at 5.4 percent. Domestic demand, supported by easing inflation and monetary policy, grew 6.7 percent. However, net exports “dragged on growth” as brisk imports outpaced exports. The manufacturing Purchasing Managers’ Index (PMI) recovered slightly to 50.7 in June from 50.1 in May.
The ADB said business confidence in the Philippines softened amid heightened global policy uncertainties, though consumer sentiment remained positive in the near term. Unemployment was low at 3.9 percent in May, and a 3.0 percent increase in remittances helped sustain household spending.
Inflation in the Philippines is expected to settle at 2.2 percent in 2025 and 3.0 percent in 2026. Despite the revised forecasts, the Philippines is still projected to post one of the fastest growth rates in Southeast Asia, second only to Vietnam’s expected 6.3 percent this year.
The ADB also lowered its growth forecasts for economies across developing Asia and the Pacific for both this year and next. These downgrades are driven by expectations of reduced exports amid higher U.S. tariffs and global trade uncertainty, as well as weaker domestic demand.
The ADB now forecasts the region’s economies will grow by 4.7 percent this year, a 0.2 percentage point decline from the projection issued in April. The forecast for next year was lowered to 4.6 percent from 4.7 percent.
“Asia and the Pacific has weathered an increasingly challenging external environment this year,” said ADB chief economist Albert Park. “But the economic outlook has weakened amid intensifying risks and global uncertainty.”
“Economies in the region should continue strengthening their fundamentals and promoting open trade and regional integration to support investment, employment and growth,” he said.
The ADB warned that prospects for developing Asia and the Pacific could be further dented by an escalation of US tariffs and trade tensions. Other risks include conflicts and geopolitical tensions that could disrupt global supply chains and raise energy prices, and a worse-than-expected deterioration in the property market of the People’s Republic of China (PRC).
Growth projections for the PRC, the region’s largest economy, are maintained at 4.7 percent this year and 4.3 percent next year. Policy stimulus for consumption and industrial activity is expected to offset continuing property market weakness and softening exports.
India, the region’s second-largest economy, is forecast to grow by 6.5 percent this year and 6.7 percent next year—down 0.2 and 0.1 percentage points, respectively, from April projections—as trade uncertainty and higher U.S. tariffs affect exports and investment.
Economies in Southeast Asia are likely to be hardest hit by worsened trade conditions and uncertainty. The ADB now predicts the subregion’s economies will grow 4.2 percent this year and 4.3 percent next year, down roughly half a percentage point from April forecasts for each year.
Bucking the downward trend are economies in Caucasus and Central Asia. The subregion’s growth projections have been raised by 0.1 percentage points for both this year and next, to 5.5 percent and 5.1 percent respectively, largely reflecting an anticipated boost in oil production.
Inflation in developing Asia and the Pacific is projected to continue slowing amid easing oil prices and strong farm output reducing food price pressures. The ADB forecasts regional inflation of 2.0 percent this year and 2.1 percent next year, compared with its April projections of 2.3 percent and 2.2 percent, respectively.
