The Asian Development Bank (ADB) downgraded its Philippine economic growth projections on Wednesday, pointing to persistent elevated inflation and extended instability from the Middle East conflict as headwinds.
The Asian Development Outlook September 2026 report reports the Manila-headquartered lender revised its gross domestic product (GDP) growth estimate for the country to 3.8 percent this year, adjusting from the 3.3 percent figure provided in July.
Looking ahead to 2027, economic expansion is projected to reach 5.1 percent, down slightly from the bank’s prior expectation of 5.3 percent.
“The economy continues to feel the impact of the Middle East conflict, but business indicators point to expected improvements in economic activity, with the industry sector still looking to expand next year,” said Andrew Jeffries, ADB country director for the Philippines.
“For the Philippines to ride through the effects of external and domestic shocks in the near term, timely government spending on planned investments especially in the social sector and critical infrastructure projects will be important,” Jeffries added.
Inflation metrics are anticipated to hold steady at an average of 5.9 percent in 2026, matching the lender’s July assessment. Price growth is expected to moderate to 4.4 percent in 2027, though this reflects an upward revision from the 3.9 percent previously forecast.
At the regional level, ADB models indicate economic growth across developing Asia and the Pacific will ease from 5.5 percent in 2025 to 5 percent this year, before picking up modestly to 5.1 percent in 2027.
“The region has remained resilient, but the risks are growing,” ADB President Masato Kanda said. “A strengthening El Niño with drier conditions means smaller harvests and reduced hydropower, pushing food and energy prices higher, and hitting the most vulnerable the hardest. The prolonged energy crisis and renewed risks in financial markets make it even more important for governments to prepare and protect the people most exposed. ADB is strongly supporting such efforts.”
Despite pressure from geopolitical friction and climate-driven energy and food price spikes, the regional trajectory continues to be anchored by strong capital investments, public fiscal stimulus, and sustained demand for technology exports tied to global artificial intelligence infrastructure.