“Domestic demand grew 6.7 percent, supported by easing inflation and monetary policy. However, net exports dragged on growth as brisk imports outpaced exports,” the Asian Development Bank said in its Asian Development Outlook July 2025 report.
PHILIPPINE ECONOMIC GROWTH is expected to settle at 5.6 percent this year, according to the Asian Development Bank (ADB), which is at the lower end of the 5.5- to 6.5-percent downgraded target of the Development Budget Coordination Committee (DBCC).
To recall, the DBCC last June 26 revised downwards its economic growth assumption for 2025 to 5.5 to 6.5 percent from the previous 6 to 8 percent, citing mounting global uncertainties.
The ADB earlier projected 6.1-percent economic growth this year, but still citing external headwinds.
Nonetheless, the ADB sees Philippine gross domestic product (GDP) growth coming in second in Southeast Asia this year, with easing inflation and domestic consumption bolstering the country’s economic growth amid lower exports.
“Domestic demand grew 6.7 percent, supported by easing inflation and monetary policy. However, net exports dragged on growth as brisk imports outpaced exports,” the ADB said.
In its Asian Development Outlook July 2025 report released on Wednesday, the ADB said growth outlook for the Philippines is the second highest in Southeast Asia, next to Vietnam’s 6.3 percent. Meanwhile, Indonesia is seen growing by 5 percent, Malaysia by 4.3 percent, Singapore by 1.6 percent, and Thailand by 1.8 percent.
For 2026, Philippine GDP growth is forecast to settle at 5.8 percent.
The Philippine economy expanded by 5.4 percent in the first quarter of the year, which was quite disappointing. And while the ADB cited that the manufacturing index (PMI) recovered slightly to 50.7 in June from 50.1 in May, business confidence declined the face of heightened global policy uncertainties.
Besides the Philippines, the ADB also downgraded the GDP growth forecasts for most countries in Southeast Asia for 2025 and 2026, citing increased trade uncertainty.
“Weaker external conditions have hurt business and consumer sentiment and threaten to disrupt investment in the subregion,” it said.
“Except for Indonesia, the largest economy in the subregion, all Southeast Asian economies are expected to post weaker growth in the next two years,” the ADB added.
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