ADB says PHL still likely to post second-fastest growth in Southeast Asia

THE ASIAN Development Bank (ADB) slashed its growth forecasts for the Philippines for this year and 2026 but it is still expected to be the second-fastest growing economy in Southeast Asia.

- -Aubrey Rose A. Inosante

In its December Asian Development Outlook (ADO), the multilateral lender slashed its Philippine gross domestic product (GDP) growth forecast to 5% from 5.6% in September.

For 2026, the ADB trimmed its Philippine growth forecast to 5.3% from 5.7% previously.

These latest projections are below the government's 5.5-6.5% target for this year, and the 6-7% growth goal for 2026 to 2028.

In its report released on Wednesday, the ADB said the lower growth prospects for the Philippines were “due to weak infrastructure spending amid investigations of publicly funded projects, and natural hazards.”

Data from the Department of Budget and Management showed that expenditure on infrastructure and other capital outlays for the January-to-September period declined by 10.7% to P877.1 billion from P982.4 billion a year ago.

Sluggish infrastructure spending, affected by adverse weather and stricter fund releases to the Department of Public Works and Highways, dragged Philippine GDP growth to a weaker-than-expected 4% in the third quarter. This brought the nine-month average growth to 5%.

“Low inflation and ongoing monetary easing should sustain domestic demand, supporting stronger growth in 2026,” the ADB said.

The Bangko Sentral ng Pilipinas has so far reduced borrowing costs by a cumulative 175 basis points (bps) since it began its easing cycle in August last year, bringing the key rate to 4.75%.