Strong domestic demand, sustained investments in social services and vital public infrastructure and modest inflation will underpin Philippine economic growth this year and next, the Asian Development Bank (ADB) said in a report.
The ADB, in its flagship Asian Development Outlook (ADO) April 2025 report released Wednesday, forecast the Philippines’ gross domestic product (GDP) to expand by 6.0 percent in 2025 and 6.1 percent in 2026, up from 5.6 percent growth last year. The Philippines will continue to be one of the fastest-growing economies in Southeast Asia, the ADB said.
The growth forecasts were finalized before the US administration’s April 2 announcement of new tariffs, so the baseline projections only reflect tariffs previously in place. However, the ADO April 2025 includes an analysis of how higher tariffs may affect growth in Asia and the Pacific.
“The Philippines remains a bright spot in the Southeast Asian region, with robust private consumption and sustained investments, particularly in infrastructure, continuing to fuel growth,” said ADB country director for the Philippines said Pavit Ramachandran.
Increased uncertainty in global trade and investment policies following the US tariff announcement may impact market sentiment and investment decisions. Geopolitical tensions and weather shocks could also pose challenges, the report said.
The ADB forecasts inflation to remain within the government’s target range of 2.0 percent to 4.0 percent, averaging 3.0 percent in both 2025 and 2026. This reflects stable global commodity prices, particularly oil, and a slowdown in rice inflation.
Economic expansion will be fueled by rising employment, with the jobless rate at 4.3 percent in January 2025 against 4.5 percent in January 2024, translating to an additional 2.6 million jobs generated within the period, it said.
Higher household incomes supported by minimum wage hikes in several regions, remittance inflows from Filipinos overseas, and election-related spending ahead of the mid-term elections in May will all help bolster domestic consumption.
More jobs will be created following the easing of foreign ownership restrictions in sectors such as renewable energy, telecommunications, shipping, railways, and expressways, along with sustained government efforts to strengthen industry upskilling, reskilling and labor market programs.
Public expenditure is expected to rise with the 9.7 percent increase in the national budget for 2025. A third of the budget will fund social services including national health insurance, education, skills training and livelihood programs, conditional cash transfers and food vouchers to low-income families.
The ADB is supporting the Pantawid Pamilyang Pilipino Program under the Expanded Social Assistance Program and is preparing to help finance the Walang Gutom (Zero Hunger) Food Voucher Program.
The government aims to maintain infrastructure spending at 5.0 percent to 6.0 percent of GDP over the medium term, with average infrastructure spending at 5.8 percent of GDP from 2022 to 2024. To ensure efficient project implementation, a flagship project management office was established to oversee large-scale transportation projects.
These projects include the ADB-financed Malolos Clark Railway Project and the South Commuter Railway Project, which will link Metro Manila to northern and southern provinces in the Luzon region, and the Bataan-Cavite Interlink Bridge Project, expected to be one of the world’s longest bridges when constructed.