The Asian Development Bank (ADB) revised its 2025 economic growth forecast for the Philippines down to 6 percent from 6.2 percent after taking into account the slower economic performance in the fourth quarter of last year.
ADB’s updated growth projection for 2025, published in the Asian Development Outlook (ADO) April 2025 and released on Wednesday, is at the lower end of the government’s medium-term growth assumption of 6 percent to 8 percent.
The bank published its previous forecast of 6.2 percent in its ADO for December 2024.
“The slight downgrade from 6.2 percent in December actually considered the lower-than-expected turnout in Q4 of 2024 because we have seen household spending growth moderated more than we expected,” Teresa Mendoza, senior economics officer at the ADB Philippines country office, said in a press conference on Wednesday in Pasig City.
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“This was also actually an effect of the lingering impacts of high inflation for most of the year (2024), although it trended lower in the second half up to the fourth quarter, and also the lagged impacts of tight monetary policy,” she added.
For the fourth quarter of 2024, the economy grew 5.2 percent, unchanged from the third quarter but slower than 5.5 percent a year earlier.
Still the fastest
Still, ADB said the Philippines will continue to be one of the fastest growing economies in Southeast Asia, with only Vietnam and Cambodia seen outpacing ADB’s growth projections for the Philippines this year and in 2026.
The latest ADO also showed ADB’s Philippine growth forecast for 2026 at 6.1 percent.
The Manila-based multilateral lender said the growth forecasts were finalized prior to the April 2 announcement of new tariffs by the US, so that the baseline projections only reflect tariffs that were already in place.
”The situation is still unfolding as we know. So it’s very soon to tell,” ADB Philippines principal country specialist Cristina Lozano said.
“In July, we’ll have a better idea, but I want to make a point that the Philippines faces these US tariffs and the potential global slowdown from a position of relative strength,” she said.
“The macroeconomic fundamentals are very strong. Employment levels are very high. Unemployment is below 5 percent and inflation is very low. There is a preliminary position of strength to face these challenges,” Lozano added.
She said she has also observed that so far the services sector remains unaffected by the US tariffs, while semiconductors are exempted.
“We don’t know what’s going to happen, but for the moment, the Philippine economy is protected because most of the exports of the Philippines are in the semiconductor sector,” Lozano said.
“So we need to consider all these elements as well, but the situation is uncertain and is unfolding as we speak now,” she added.
A bright spot
ADB said strong domestic demand, sustained investment in social services and vital public infrastructure and modest inflation will underpin Philippine economic growth for 2025 and 2026.
“The Philippines remains a bright spot in the Southeast Asian region, with robust private consumption and sustained investments, particularly on infrastructure, continuing to fuel growth,” ADB country director for the Philippines Pavit Ramachandran said.
“I think in general, increasing the sophistication of the economy, I think is a resilient strategy. I think in today’s setting particularly, for the Philippines, given that 60 percent of their exports are electronics — and that is relatively concentrated in a few markets — I think diversification is something that is worth pursuing,” he added.
Heightened uncertainty
The Manila-based ADB said heightened uncertainty in global trade and investment policies following the announcement of new US tariffs may impact market sentiment and investment decisions. Geopolitical tensions and weather shocks could also pose challenges.
ADB forecasts inflation to remain within the government’s target range of 2 percent to 4 percent, averaging 3 percent both in 2025 and 2026.
This reflects stable global commodity prices, particularly oil and a slowdown in rice inflation, the report said.
Rising employment
Economic expansion will also be supported by rising employment, ADB said. It added: Higher household incomes supported by minimum wage hikes in several regions, remittance inflows from Filipinos overseas, as well as election-related spending ahead of the mid-term elections in May will all help bolster domestic consumption.
ADB sees more jobs following the easing of foreign ownership restrictions in sectors, such as renewable energy, telecommunications, shipping, railways and expressways along with sustained government efforts to strengthen industry upskilling, reskilling and labor market programs.
