The Asian Development Bank (ADB) on Wednesday lowered its gross domestic product (GDP) growth forecasts for the Philippines for 2025 and 2026, citing weaker public infrastructure spending and natural hazards.
The move comes as the bank upgraded its growth outlook for developing Asia and the Pacific, led by robust exports and stronger-than-expected growth in India.
The ADB, in its Asian Development Outlook (ADO) released in December 2025, reduced the Philippines’ 2025 GDP growth forecast to 5.0 percent from 5.6 percent projected in September. The 2026 outlook was also cut to 5.3 percent from 5.7 percent.
It noted that the Philippines’ GDP growth slowed to 4.0 percent in the third quarter of 2025—the lowest rate since the first quarter of 2021—averaging 5.0 percent for the year up to that period.
The deceleration was primarily attributed to lower government spending on flood control projects, which was curbed by investigations into publicly-funded projects and stricter fiscal and budget-execution controls. Adverse weather also constrained public investment and household spending.
Despite the headwinds, the ADB anticipates that low inflation and ongoing monetary easing will sustain domestic demand and support stronger growth in 2026.
Household consumption, while moderating, remains supported by low unemployment, which stood at 3.8 percent in September 2025, and steady remittances.
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Private construction also grew, and the purchasing managers’ index (PMI) indicated expansion in services (50.8) and retail/wholesale (51.3) in October. However, the S&P Global manufacturing PMI dropped to 47.4 in November from 50.1 in October, although the 12-month outlook for output remained positive.
The ADB warned that uncertainties from the infrastructure investigations and weather-related disruptions pose downside risks.
The ADB maintained the Philippines’ inflation forecasts at 1.8 percent for 2025 and 3.0 percent for 2026. Inflation averaged 1.7 percent in the first 10 months of 2025, but recent typhoons and weather disturbances could exert upward pressure on prices. Inflation is projected to pick up in 2026 on higher electricity rates and base effects, moving back within the central bank’s 2 percent to 4 percent target.
Meanwhile, the ADB raised its growth forecasts for developing Asia and the Pacific. The region’s economy is now projected to expand by 5.1 percent this year, up from a 4.8 percent forecast in September. The outlook for 2026 was also upgraded by 0.1 percentage points to 4.6 percent.
The upgrade is primarily due to stronger-than-expected growth in India, fueled by robust domestic consumption, and solid export performance in the region’s high-income technology-exporting economies.
The reduced trade uncertainty following the conclusion of several trade agreements with the United States also contributed to the improved 2026 outlook.
“Asia and the Pacific’s solid economic fundamentals are underpinning robust export performance and steady growth, despite a global trade environment clouded by historic levels of uncertainty over the past year,” said ADB chief economist Albert Park.
Park said trade agreements have partly eased that uncertainty, but external and other challenges could still weigh on the outlook.
India’s 2025 growth projection was raised by 0.7 percentage points to 7.2 percent, reflecting a stronger third-quarter expansion supported by tax cuts.
Its 2026 forecast remains unchanged at 6.5 percent. The People’s Republic of China’s (PRC) 2025 growth forecast was raised to 4.8 percent from 4.7 percent amid resilient exports and continued fiscal stimulus, while its 2026 outlook stays at 4.3 percent.
Southeast Asia’s growth projection for this year was upgraded by 0.2 percentage points to 4.5 percent, reflecting a strong third quarter in Indonesia, Malaysia, Singapore and Vietnam.
Regional inflation is expected to ease further to 1.6 percent this year, down from the 1.7 percent September projection, mainly reflecting lower-than-anticipated food inflation in India. The region’s inflation forecast for next year remains 2.1 percent.
