The Manila-based Asian Development Bank (ADB) has maintained its Philippine growth forecast at 5.6 percent for 2025, unchanged from its projection in July.

In its latest Asian Development Outlook (ADO) report released Tuesday, Sept. 30, the ADB’s 2026 growth projection for its host country was revised slightly lower to 5.7 percent from 5.8 percent previously. Despite this adjustment, the Philippines is expected to remain one of Southeast Asia’s top performers this year and next year, posting the region’s second-fastest growth after Vietnam’s 6.7 percent and six percent, respectively.

While the lender’s growth expectation for this year is within the government’s target range of 5.5 to 6.5 percent, it is lower than last year’s 5.7-percent expansion. First half gross domestic product (GDP) growth averaged 5.45 percent.

For next year, the government targets a faster six- to seven-percent GDP expansion, above the ADB’s forecast.

“The Philippines’ growth outlook remains resilient amid a global environment of shifting trade and investment policies and heightened geopolitical uncertainties,” ADB country director for the Philippines Andrew Jeffries said in a statement.

“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.

According to the ADB, strong household and business demand, coupled with easing inflation, is expected to drive Philippine economic growth this year and in 2026.

Inflation is projected to slow to 1.8 percent in 2025 before rising to three percent in 2026, remaining within the government’s target range of two- to four-percent annual price increases deemed manageable and conducive to economic growth. Headline inflation averaged 1.7 percent as of end-August.

The updated 2025 inflation forecast is lower than July’s projection of 2.2 percent, with slower global commodity prices and subdued food costs—helped by improved domestic rice supply—seen keeping inflation contained.

“This subdued inflation outlook will support an accommodative monetary policy,” the ADB said.

Since the Bangko Sentral ng Pilipinas (BSP) started its easing cycle in August 2024, it cut key interest rates by a total of 150 basis points (bps), lowering the policy rate to the current five percent.

However, the ADB cautioned that adverse weather and climate-related shocks, including around 20 typhoons annually, could push commodity prices higher.

The ADB noted other risks include global uncertainty, potential shifts in international economic policies, and rising trade barriers, all of which may affect market confidence and slow growth.

The bank also highlighted that sustained government spending on social services could further stimulate domestic demand, citing the BSP’s survey in the second quarter of 2025 that showed business sentiment remained positive, although slightly dampened by external challenges.

“Consumer outlook stayed optimistic for 2026. This bodes well for private consumption growth, which is partly supported by steady inflow of remittances from overseas Filipinos,” it added.

It also highlighted that infrastructure remains a key government priority, with planned spending set at five to six percent of GDP in the medium term. This includes major projects in roads, bridges, ports, and railways.

The ADB emphasized that the Accelerated and Reform Right-of-Way (ROW) Law, which streamlines land acquisition for government and public-private partnership (PPP) projects, will help accelerate infrastructure development.

For the lender, the law will support the government’s key infrastructure initiatives, such as the ADB-backed Malolos-Clark Railway Project and the South Commuter Railway Project, connecting Metro Manila to northern and southern Luzon provinces, as well as the Bataan-Cavite Interlink Bridge Project, which is anticipated to rank among the world’s longest bridges once finished.

(Ricardo M. Austria)