ADB cuts 2026 Philippine growth outlook to 3.3 percent

MANILA — The Asian Development Bank cut its 2026 growth outlook for the Philippines to 3.3 percent from 3.8 percent in July, as it noted that higher inflation and the prolonged Middle East
conflict have weighed on consumption and investment.

“Worsening geopolitical tensions and extreme weather shocks, including worse-than-expected El Niño impacts, could intensify further inflationary pressures,” said Teresa Mendoza, ADB Senior Economic Officer for the Philippines.

She added that both public and private investments have continued to soften in recent months. The peso depreciation has also affected prices of imported goods. 

Inflation is expected to average 5.9 percent this year, similar to the July forecast. This is still due to the effects of high oil prices, which impact other goods. 

“A pickup in inflation for the rest of the year… So it’s actually quite high,” she added. 

The ADB, however, is seeing a recovery in 2027. GDP outlook is 5.1 percent for next year. Though it is lower than the earlier 5.3 percent forecast, officials said it’s still a jump from 3.3 percent. 

They attribute this growth to expected higher government spending and recovery in private sector investments. They also see a rise in exports, which have already grown in the first half of the year. 

“Increased exports would have a positive effect on economic growth, jobs over time,” said ADB Country Director Andrew Jeffries.

Mendoza added that household consumption can improve further next year. “We’ve seen some pockets of resilience in spending on essential goods. Remittances continue to expand… Depreciation of forex actually also lifts remittances in peso terms.” 

The multilateral lender said the country should continue with the reforms it started to improve the business climate and eradicate corruption. They add that targeted government measures to mitigate impacts of both the Middle East conflict and El Niño remain essential.