THE Philippines will have to turn delayed infrastructure projects into actual construction if it wants to get economic growth back on track, the Asian Development Bank (ADB) said.
ADB President Masato Kanda said the Philippine economy could still grow by 3.8 percent this year, but only if public investment sees a ‘significant acceleration’ in the second half.
The forecast, while slower than the 4.4 percent growth recorded in 2025, remains within the government’s recalibrated 3.5- to 4.5-percent growth target for 2026.
‘The primary challenge facing infrastructure is increasingly related to execution rather than financing. Public construction fell in the second quarter, despite the budget being in place, largely due to the time abuse and oversight,’ Kanda said during a media briefing on Monday.
While stronger oversight of infrastructure projects is necessary, Kanda said this has also slowed project implementation, making faster and more efficient delivery critical to sustaining public investment.
‘Oversight is the right direction. We’ve got to do that,’ he added.
The slowdown in project implementation came as the broader economy weakened further in the second quarter, with growth easing to 2.3 percent from 2.8 percent in the first quarter and 5.4 percent a year earlier.
The weakness was reflected in both domestic demand and investment. Household consumption growth slowed to 2.8 percent, while investment contracted by 9.2 percent.
Construction, in particular, became a major drag on growth, contracting by 14.8 percent year-on-year in the second quarter, significantly steeper than the 4.3-percent decline in the previous quarter.
Kanda said the multilateral lender is now working with the Department of Public Works and Highways and the Department of Transportation to improve project delivery, including procurement and contract management.
The push to accelerate infrastructure spending, however, comes with external risks that could further weaken growth.
Kanda said a resurgence of the conflict in the Middle East could weigh on the Philippine economy through higher energy, food and fertilizer prices, as well as tighter financial conditions.
The conflict could also affect remittance flows and tourism, he said.
Addressing corruption
Kanda stressed that the push to accelerate project implementation must be matched by strong safeguards against corruption-a balance that ADB also applies to the projects it finances.
He noted that the ADB maintains a strict zero-tolerance policy toward corruption in projects it finances, with risks managed through strong procurement systems, independent oversight and clear accountability.
He said the bank investigates issues when they arise and takes corrective action to ensure those responsible are held accountable.
Beyond individual projects, Kanda said stronger public financial management is essential to preventing corruption by making government spending more transparent and easier to track.
‘A key component of this effort of the public financial management reform is strengthening transparency through the digitalization of the public sector management roadmap. By monitoring the system, we help ensure that public funds are budgeted, monitored, and spent transparently,’ he added.
Kanda said the ADB supports the Philippine government’s public financial management reforms as part of a longer-term effort to strengthen transparency and accountability in public spending.
If public spending normalizes and inflation eases, Kanda said growth could accelerate to 5.3 percent in 2027.
‘Over the medium term, the growth outlook remains somewhat positive, supported by reforms, including expanding opportunities for foreign investment, which ADB will strongly support,’ he said.