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Manila Bulletin devider Business devider The Economy devider ADB downgrades Philippine growth forecasts amid infra corruption scandal, weather disruptions

ADB downgrades Philippine growth forecasts amid infra corruption scandal, weather disruptions

Published Dec 10, 2025 01:37 pm
The country’s gross domestic product (GDP) growth is expected to miss the government’s 2025 and 2026 targets as the Manila-based Asian Development Bank (ADB) cut its forecasts for its host country, the Philippines, citing reduced public infrastructure spending amid a flood-control corruption scandal and natural hazards.
In its Asian Development Outlook (ADO) for December 2025 released Wednesday, Dec. 10, the ADB revised down its growth forecasts for the Philippines, projecting five percent for 2025 and 5.3 percent for 2026. Both figures fall short of the government’s targets of 5.5- to 6.5-percent expansion for 2025 and six to seven percent for 2026.
The updated projections are also below the actual GDP growth of 5.7 percent in 2024.
The ADB’s December ADO forecasts mark notable downgrades from its September outlook, which had projected Philippine growth at 5.6 percent for 2025 and 5.7 percent for 2026.
“Growth projections were cut for the Philippines, largely due to weak public infrastructure investment,” the ADB said.
The ADB noted that the Philippines’ GDP growth slowed to four percent in the third quarter—the slowest quarterly expansion in 4.5 years—and averaged five percent for the year to date, mainly due to reduced government spending on infrastructure projects amid ongoing investigations and tighter controls.
“Despite subdued investor sentiment, private construction grew and October’s PMI [purchasing managers’ index] indicated expansion in services (50.8) and retail and wholesale (51.3),” the ADB added.
The ADB also noted that the November S&P Global Philippine manufacturing PMI fell to 47.4 percent from 50.1 in October, but the 12-month outlook remained positive as firms anticipated higher output.
The ADB added that household consumption has moderated but continues to be supported by low unemployment, which stood at 3.8 percent in September, and steady remittances from overseas Filipino workers (OFWs).
The Philippine Statistics Authority (PSA) reported on Wednesday that the unemployment rate rose to a three-month high of five percent in October, representing about 2.54 million jobless individuals, as more Filipinos sought jobs amid the Christmas holiday season.
The ADB outlook added that inflation in the Philippines is projected to remain subdued at 1.8 percent in 2025 before rise to three percent in 2026.
“Inflation remained low, averaging 1.7 percent in the first 10 months, although the impact of recent typhoons and weather disturbances could put upward pressure on prices,” the ADB said.
The government reported last week that headline inflation averaged 1.6 percent as of end-November, below the Bangko Sentral ng Pilipinas’ (BSP) two- to four-percent target band of manageable year-on-year price increases deemed conducive to economic growth.
But the ADB cautioned that inflation is expected to pick up in 2026 due to higher electricity rates and base effects, although the annual rate is projected to remain within the central bank’s target.
“Low inflation and ongoing monetary easing should sustain domestic demand, supporting stronger growth in 2026. However, uncertainties arising from investigations of publicly funded infrastructure projects and weather-related disruptions pose downside risks,” the ADB said.
Meanwhile, in a statement on Tuesday, Dec. 9, the ADB said its president, Masato Kanda, visited Malacañang Palace to meet with President Ferdinand R. Marcos Jr., reaffirming the multilateral bank’s commitment to supporting the Philippines’ chairmanship of the Association of Southeast Asian Nations (ASEAN) in 2026.
“ASEAN 2026 will be a defining year for the Philippines, as ASEAN looks to reposition itself amid global shifts,” Kanda noted.
“The ADB is committed to support the Philippines in elevating ASEAN’s ambition to become more competitive, resilient, and sustainable,” Kanda said. “I was pleased that our proposals were welcomed by President Marcos and we look forward to working together on the success of ASEAN 2026.”
The statement added that the ADB is planning a comprehensive support package to help the Philippines achieve regional goals under the ASEAN 2026 theme, “Navigating our Future Together,” which was launched last month.
It noted that, “This will include helping ASEAN with artificial intelligence (AI) readiness and deployment, regional connectivity and integration, and other priorities shared by President Marcos.”
(Ricardo M. Austria)
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