A TOUGHER YEAR is forecast for the Philippines in 2025 and 2026 owing to global headwinds and a broader slowdown across Southeast Asia because of soft global demand and trade tensions, prompting the Asian Development Bank to reduce its 2025 and 2026 growth projection to 5.6 percent (from 6 percent) and for 2026 to 5.8 percent from 6.1 percent.
The 2025 Asian Development Outlook for July 2025 said the revision follows a “weaker than expected” GDP (gross domestic product) growth of 5.4 percent in the first quarter, despite easing inflation and a pickup in domestic demand.
The ADB said business confidence in the Philippines waned because of heightened global policy uncertainties, though consumer sentiment remained upbeat in the short-term.
While domestic consumption remained a bright spot—fueled by low unemployment, stronger remittances, and accommodative monetary policy—net exports dragged on overall growth as import volumes outpaced exports, reported Bilyonaryo.
The ADB projects inflation to average 2.2 percent in 2025, before picking up to 3.0 percent in 2026, both within the central bank’s target range.
‘The region has been hit by sluggish electronics demand, weak commodity prices, and rising trade protectionism, with higher U.S. tariffs adding pressure.’
LOWEST REMITTANCES
Remittances, which rose 3 percent in May, continued to support household spending, while the unemployment rate held at 3.9 percent, among the lowest in the region.
The Philippines’ revised outlook mirrors broader cuts across Southeast Asia, with the ADB slashing its 2025 regional growth forecast to 4.2 percent, down from 4.7 percent. The 2026 projection was also reduced to 4.3 percent from 4.8 percent.
“Asia and the Pacific has weathered an increasingly challenging external environment this year. But the economic outlook has weakened amid intensifying risks and global uncertainty,” said Albert Park, ADB’s chief economist.
SLUGGISH DEMAND
The region has been hit by sluggish electronics demand, weak commodity prices, and rising trade protectionism, with higher U.S. tariffs adding pressure. These factors have weighed on export-heavy economies like Vietnam, Thailand, and Malaysia.
Despite the downgrade, the Philippines is still expected to post one of the region’s strongest growth rates in 2025, second only to Vietnam’s 6.3 percent.
Park said governments should prioritize reforms that enhance investment, trade, and regional integration, emphasizing that strengthening fundamentals is critical to navigating the uncertain global landscape.
#Asian Development Banking
#PhEconomy
#Investments
#UStariff
#ThePhInsider