When two reputable funding institutions give a country a healthy assessment of its economy, then its economic team must be doing something good despite the headwinds.
The Philippines finds itself in an enviable position again-economic growth is steady and the inflation rate fully reined in.
Both the International Monetary Fund (IMF) and the Asian Development Bank (ADB) continue to believe that the Philippines is heading in the right economic direction.
A visiting IMF team had assessed that the Philippines achieved successful ‘disinflation’ and economic growth remained resilient despite ‘negative external spillovers.’
The inflation rate is a crucial barometer of growth. Higher prices, when not arrested, will curb consumption and ultimately constrict economic growth. Consumers with reduced purchasing power will naturally spend less. This, in turn, could lead to slower expansions in the manufacturing sector and lower employment opportunities.
The IMF, which periodically sends a team to the Philippines under Article IV Consultation to assess its economic performance, is obviously pleased with what the government of President Ferdinand Marcos Jr. has achieved so far.
The IMF expects inflation to average 1.6 percent in 2025 and remain around the mid-point of the target band set by the Bangko Sentral ng Pilipinas (BSP) in 2026.
The IMF, though, slightly cut its 2025 growth forecast for the Philippines and noted that the BSP had room to further ease monetary policy given a favorable inflation outlook and elevated risks to growth.
The IMF now expects the Philippine economy to grow 5.4 percent in 2025, slower than its 5.5-percent estimate in July. It expects growth to accelerate to 5.7 percent in 2026.
Against the backdrop of external risks, including prolonged global trade policy uncertainty, geopolitical tensions and disruptive financial market corrections, the slightly lower forecast for the Philippine economy is not at all discouraging.
The Philippine economy, after all and as the IMF correctly observed, ‘holds significant potential with a sizable demographic dividend and abundant natural resources.’
The ADB, meanwhile, has more upbeat expectations. Robust domestic demand amid subdued inflation, according to the bank last week, will support Philippine economic growth this year and next.
The ADB, in its Asian Development Outlook (ADO) September 2025 report, saw the country’s gross domestic product (GDP) expanding by 5.6 percent this year and 5.7 percent in 2026, compared with the 5.7-percent growth last year.
The 2025 GDP projection was maintained from the ADB’s July ADO forecast, while the 2026 growth estimate was slightly lower than 5.8 percent in July.
The Philippines is expected to remain a bright spot in Southeast Asia, with the second highest GDP expansion in the region.
‘The Philippines’ growth outlook remains resilient amid a global environment of shifting trade and investment policies and heightened geopolitical uncertainties,’ says Andrew Jeffries, ADB country director for the Philippines.
Despite uncertainties, Jeffries sees strong domestic demand supporting growth, ‘with sustained investments and an accommodative monetary policy supporting the economy’s expansion.’
The ADB, like the IMF, expects the inflation to ease more this year than earlier projected, slowing to 1.8 percent before rising to 3.0 percent in 2026 to return to the government’s target range of 2 percent to 4 percent.
Infrastructure again will be the key to a sustainable economic growth. The government aims to maintain infrastructure spending at 5 percent to 6 percent of the GDP over the medium term. This includes investments in big-ticket road, bridge, port, and railway projects.
As I mentioned last week in my column, the Accelerated and Reformed Right-of-Way (ARROW) Act would streamline the land acquisition process for government and public-private partnership projects.
The new law is a game changer that will help speed up infrastructure investments. It will benefit the government’s flagship projects, including 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.
The ARROW Act will also support the Bataan-Cavite Interlink Bridge Project, which is expected to be one of the world’s longest bridges when completed.
The consumer outlook in the Philippines also remains optimistic for 2026. This perception is conducive for private consumption growth, aided by a steady inflow of remittances from Filipinos working overseas.
As we march toward the last quarter of the year, we have reasons to be optimistic again for 2026.