The Asian Development Bank (ADB) has maintained its gross domestic product (GDP) growth forecast for the Philippines at 5.6 percent this year, but trimmed its projection for 2026 amid heightened uncertainties from global trade policy changes.
In a report, the ADB said it expects the Philippine economy to grow by 5.6 percent this year, unchanged from its July forecast.
If realized, Philippine economic growth would fall within the government’s 5.5 to 6.5 percent growth target for the year.
The ADB also expects the Philippines to remain a bright spot in Southeast Asia this year, posting the second-fastest growth in the region, next to Vietnam’s 6.7 percent.
In the first semester, the Philippine economy posted an average growth of 5.4 percent.
For 2026, the ADB’s new growth projection is 5.7 percent, slightly lower than the previous forecast of 5.8 percent.
The forecast is also below the government’s target of six to seven percent growth for 2026.
The ADB adjusted the 2026 forecast due to a more challenging external environment, heightened uncertainty, shifting trade and investment policies, as well as a lower growth forecast in major advanced economies, which could weigh on trade and investment prospects.
Despite the risks, ADB country director for the Philippines Andrew Jeffries said the country’s growth outlook remains resilient.
‘Though these uncertainties pose increased risk, we see strong domestic demand anchoring growth, with sustained investments and an accommodative monetary policy supporting the economy’s expansion,’ he said.
The report also showed that the ADB expects inflation to ease further this year to 1.8 percent, slower than the 2.2 percent forecast it provided in July.
Inflation averaged 1.7 percent from January to August.
For next year, the ADB expects inflation to rise to three percent and return to the government’s target range of two to four percent.
Inflation is expected to remain low due to slower global commodity prices and muted food prices, as well as improvements in the local rice supply.
The ADB noted, however, that adverse weather conditions and climate shocks could put pressure on commodity prices.
Corruption issues in the government’s flood control projects also pose risks to the economic projections.
‘Corruption has broad impacts on economic growth in general and investment sentiment. So we’re monitoring that and how that may be affected going forward,’ Jeffries said.
With the economy driven mainly by domestic consumption, he said the ADB did not reduce the GDP forecasts due to the recently exposed corruption issues.
‘But it’s certainly a heightened risk. Between now and our December update, there may be more quantifiable data available that may alter our projections,’ he said.
Despite the corruption issues, he reiterated the ADB’s continued support for projects in the country.
‘We don’t anticipate backing off if the government requests more of our assistance,’ he said.
He emphasized that the ADB has strict oversight measures in place to ensure that loan disbursements are used for their intended purpose.
The ADB also has strict technical and financial qualifications in the procurement of projects.
While the government has flagged contractors that cornered a significant amount of flood control projects, the ADB said an officially sanctioned government blacklist would be needed to debar firms from its projects.