ADB likely to trim Philippine growth forecasts

THE ASIAN Development Bank (ADB) is likely to downgrade its Philippine gross domestic product (GDP) growth forecasts for this year and next year, as a graft scandal hurt investments and public spending.

“We were revising things downward,” ADB Country Director for the Philippines Andrew Jeffries told reporters on the sidelines of an event on Dec. 4.

The downward revision may likely cover both this year and 2026, he added.

The multilateral lender earlier gave a 5.6% GDP growth projection for the Philippines this year, still within the government’s 5.5-6.5% goal.

Asked if the revised projection will be lower than the government target for 2025, Mr. Jeffries replied: “Likely.”

For 2026, the ADB sees the Philippines growing slightly faster at 5.7%, but still below the government’s 6-7% growth goal.

“By the way, it still might change (this week). But it is trending down from what we had earlier released for both years,” Mr. Jeffries said.

The ADB said it will release its latest Asian Development Outlook (ADO) on Dec. 10, which will include revised growth forecasts for the Philippines and reflect the impact of the flood control corruption scandal.

The Philippine government is currently investigating a multibillion-peso public works scandal involving government officials, lawmakers and private contractors. This corruption scandal has weighed on third-quarter economic growth as spending slowed and consumer and investor sentiment declined.

The Philippine economy grew by 4% in the third quarter, the slowest growth seen in over four years. This brought average GDP growth to 5% in the first nine months.

The ADB earlier warned widespread corruption can impact economic growth and investor sentiment, saying it is a “heightened risk.”

Despite this, Mr. Jeffries said he expects the economy to rebound in 2026, as he expects a recovery in public infrastructure spending that could lift GDP growth.

“The question is when and we think (public investment) is going to recover faster than that. We predict, and I think it’s consistent with what we’ve seen from others, that next year there will be growth compared to this year,” he said.

Mr. Jeffries also said the recovery would likely be faster than the public infrastructure slowdown in 2011, when it took four quarters for public investment to rebound.

While the first half of 2025 was upbeat and “generally rosy,” he noted the Philippine economy had a rough second half amid the flood control mess.

To bolster investor sentiment, Mr. Jeffries added that the government should attract more foreign direct investment while pursuing reforms and accountability.

“What can the government do about it, I think, is just take the concern seriously and push forward with some of the changes and reforms and improvements that have been talked about,” he said.

Earlier, Finance Secretary Frederick D. Go said he expects the Philippine GDP growth to return to 5.5% as early as first quarter of 2026 as government spending bounces back, Bloomberg reported last week.

Former Finance head and Executive Secretary Ralph G. Recto had also anticipated an economic comeback next year with sustained low inflation and stronger government of the Marcos administration.

Meanwhile, Economy Secretary Arsenio M. Balisacan said the Development Budget Coordination Committee is set to meet on Dec. 9 to review the macroeconomic assumptions and targets after he conceded that this year’s growth target is unlikely to be achieved.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said a recovery next year is possible, but not “automatic.”

“The flood control scandal hit confidence hard, and trust takes time to rebuild. If reforms are credible and infrastructure spending resumes, GDP could bounce back to 6% territory,” he told BusinessWorld in a Viber message over the weekend.

Mr. Ravelas also noted that investor sentiment is hinged on transparency,

“Show them governance is improving, and capital will follow,” he said.

In a recent European Chamber of Commerce of the Philippines 2025 Business Sentiment Survey Report, it found that 70.3% of respondents said they expect business activity to rise, while 26.7% foresee no change in the next 12 months. Just 2.9% anticipate a decline. — Aubrey Rose A. Inosante