In its Asian Development Outlook (ADO) September 2025 report, ADB forecast the country’s gross domestic product (GDP) to expand by 5.6 percent in 2025 and 5.7 percent in 2026, following last year’s 5.7 percent growth.
Still a bright spot in Southeast Asia
The 2025 projection was unchanged from the July ADO forecast, while the 2026 estimate was trimmed slightly from 5.8 percent. Still, the Philippines is expected to remain a bright spot in Southeast Asia, with the second-highest GDP growth in the region, according to the multilateral lender.
“The Philippines’ growth outlook remains resilient amid a global environment of shifting trade and investment policies and heightened geopolitical uncertainties,” said ADB Country Director for the Philippines Andrew Jeffries.
“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 added.
Inflation outlook, risks
ADB projects inflation to slow more this year than previously expected, easing to 1.8 percent in 2025 before rising to 3.0 percent in 2026 to return to the government’s target range of 2 to 4 percent.
The updated 2025 forecast is lower than July’s 2.2 percent estimate. Muted global commodity prices and stable food costs, supported by improved domestic rice supply, are expected to keep inflation subdued.
“This subdued inflation outlook will support an accommodative monetary policy,” the report said.
However, the ADB cautioned that adverse weather conditions and climate shocks—given that the Philippines is visited by at least 20 typhoons annually—could put upward pressure on prices.
Other downside risks include shifts in global trade and investment policies, heightened external uncertainty, and rising trade barriers.
Investments and consumption
The report said sustained government investments, including those for social services, will continue to bolster domestic demand. Business sentiment remained positive in the Bangko Sentral ng Pilipinas’ second-quarter survey, although slightly softer due to external risks.
Consumer outlook also stayed optimistic for 2026, auguring well for private consumption growth, which remains underpinned by steady remittances from overseas Filipinos.
The government aims to keep infrastructure spending at 5 to 6 percent of GDP over the medium term. This includes major projects in roads, bridges, ports, and railways.
The recently signed Accelerated and Reformed Right-of-Way Act is expected to streamline land acquisition for government and public-private partnership projects, helping fast-track big-ticket infrastructure.
Among the beneficiaries are the ADB-financed Malolos–Clark Railway Project, the South Commuter Railway Project linking Metro Manila to Luzon provinces, and the planned Bataan–Cavite Interlink Bridge, which will be one of the world’s longest when completed. —Ed: Corrie S. Narisma
