The Asian Development Bank (ADB) has slashed its economic growth forecasts for the Philippines for both this year and the next, as inflation hits consumer spending, along with delayed investments.
According to the Asian Development Outlook (ADO) report for July, the ADB expects the country’s gross domestic product (GDP) to grow by 3.8% this year, lower than its 4.4% forecast made in April.
Should this be realized, growth will slow from the 4.4% posted in 2025, but still in line with the inter-agency Development Budget Coordination Committee’s (DBCC) downgraded target range of 3.5% to 4.5%.
“(T)he Philippines saw a downward adjustment in growth projections due to delayed investments, softer private consumption amid higher commodity prices and climate-related risks,” the report read.
The ADB also downgraded its 2027 growth outlook to 5.3% from 5.5% previously.
Growth stood at 2.8% in the first quarter, which compares with the 5.4% the same quarter last year, and is the slowest footing since the 3.8% contraction in the first quarter of 2021 when the COVID-19 pandemic lockdowns were in place.
Economy and Planning Secretary Arsenio Balisacan said this is expected to pick up in the second half of the year, as sentiment and spending are expected to improve as the conflict in the Middle East eases.
In the same report, the ADB also revised its inflation outlook for the Philippines up by 1.9 percentage points — the largest upward adjustment in Southeast Asia — to 5.9%, higher than the central bank’s 2% to 4% target range.
“The upward revisions reflect higher global energy and food prices linked to the Middle East crisis, as well as exchange rate pressures that may have raised import costs across the subregion,” the report read.
Inflation clocked in at 6.4% in June, bringing the year-to-date average to 4.8%. This was slower than the 6.8% print in May, due mainly to the slower increase in transport prices.