By Justine Irish D. Tabile, Senior Reporter
THE ASIAN Development Bank (ADB) cut its growth forecasts for the Philippines for this 12 months and next 12 months, citing delayed investments and weaker household consumption.
In its Asian Development Outlook July 2026 report, the Philippine-based multilateral lender lowered its Philippine gross domestic product (GDP) growth forecast to three.8% from the 4.4% previously.
The newest forecast is inside the Philippine government’s recently revised 3.5-4.5% GDP goal for 2026, but is slower than the 4.4% growth posted in 2025.
The ADB also trimmed its 2027 growth forecast to five.3% from 5.5% previously, placing it on the lower end of the federal government’s revised 5-6% goal.
“The Philippines saw a downward adjustment in growth projections on account of delayed investments, softer private consumption amid higher commodity prices and climate-related risks,” the ADB said within the report released on Wednesday.
In the primary quarter, the Philippine economy unexpectedly grew by 2.8%, its weakest growth since the coronavirus pandemic, on account of spiraling oil prices on account of the Middle East war and the lingering effects of last 12 months’s corruption scandal.
The ADB’s 2026 growth forecast for the Philippines can be below its revised 4.6% outlook for developing Southeast Asia, which was trimmed from 4.7% previously.
“The 2026 forecast for developing Southeast Asia is trimmed following downward revisions for Cambodia and the Philippines as higher energy prices weigh on domestic demand and tourism,” the multilateral lender said.
Based on ADB’s 2026 projections, the Philippines’ growth can be the fourth slowest in Southeast Asia, tied with Timor-Leste at 3.8%, and ahead of Myanmar (2.4%), Brunei Darussalam (1.8%), and Thailand (1.8%).
The Philippines is anticipated to trail Vietnam (7.2%), Indonesia (5.2%), Malaysia (4.6%), Cambodia (4.1%), and Laos (4%)
For 2027, the Philippines is anticipated to post the second-fastest growth in developing Asia, after Vietnam (7%).
The Philippines’ heavy reliance on Middle Eastern oil imports has left the economy particularly exposed to the worldwide oil shock that began in March.
The ADB raised its Philippine headline inflation forecast to five.9% this 12 months from 4% previously. That is well above the Bangko Sentral ng Pilipinas’ (BSP) 2-4% tolerance range but below the central bank’s inflation projection of 6.4%.
For 2027, the ADB hiked its headline inflation forecast to three.9% from 3.5% previously. That is on the upper end of the BSP’s 2-4% tolerance range but below its 4.5% projection.
Also, the ADB has raised its inflation forecasts for developing Southeast Asia to three.9% this 12 months from 3.2% previously, and a pair of.9% for 2027 from 2.8% previously.
“The upward revisions reflect higher global energy and food prices linked to the Middle East crisis, in addition to exchange rate pressures which have raised import costs across the subregion,” it said, citing that the most important upward revisions were recorded for the Philippines.
The ADB said disruptions in energy markets have pushed up fertilizer costs, leaving developing Asia and the Pacific economies with low fertilizer self-sufficiency vulnerable to cost volatility and supply-chain disruptions.
“Absent policy intervention, rice production could fall sharply in 2026, especially in economies reliant on imported fertilizer. The effect is best measured against the no-shock, business-as-usual scenario, under which output was otherwise projected to grow,” it added.
The ADB said Philippine rice output could decline by 14% this 12 months under essentially the most severe scenario where crude oil prices rise 75% above the baseline assumption of $69 per barrel. Under the identical scenario, farmgate prices could rise by as much as 20%.
ADB SUPPORT
Meanwhile, ADB Philippines Country Director Andrew Jeffries said the Philippines’ recent reclassification as an upper-middle income economy is unlikely to change the multilateral lender’s support within the near term.
“There are not any immediate implications for ADB financing, or other types of support including technical assistance, due to the Philippines’ recent classification as an upper-middle income economy,” he told BusinessWorld.
“ADB will proceed to support the federal government’s development priorities, in addition to the reforms and investments needed to construct on and sustain this achievement,” he added.
His remarks got here after the World Bank reclassified the Philippines as an upper-middle income country after its gross national income per capita rose to $4,850 from $4,470 last 12 months.
While no immediate changes are expected, Mr. Jeffries said the ADB’s sovereign lending terms could change if the Philippines stays above the upper-middle income threshold for 3 consecutive years.
“ADB will constantly align its engagement to answer the Philippines’ transition needs, and to sustain development gains,” he said.
The Philippines was within the World Bank’s lower-middle income category since 1987 before its latest reclassification.