The Asian Development Bank (ADB) and S&P Global Ratings have lowered their economic growth forecasts for the Philippines, citing the prolonged impact of the Middle East crisis, weaker investments, and lingering price pressures.
Lower Outlook for 2026
In its Asian Development Outlook September 2026 report, the ADB now expects the Philippine economy to grow by 3.3 percent this year, down from its earlier projection of 3.8 percent in July.
If the revised figure holds, growth would fall below the government’s updated target of 3.5 to 4.5 percent and would also trail last year’s 4.4 percent gross domestic product (GDP) expansion.
The ADB still sees a rebound in 2027, but it also trimmed next year’s forecast to 5.1 percent from 5.3 percent. That projection remains within the government’s revised medium-term goal of five to six percent.
Why the Downgrade
ADB Philippines senior economics officer Teresa Mendoza said the weaker outlook reflects continuing external and domestic headwinds. Escalating geopolitical tensions have added to inflation pressures and uncertainty, weighing more heavily on 2026 growth than previously expected.
The lender also pointed to softer investments in the first half of the year and higher prices of imported fuel and key commodities such as fertilizers.
S&P Issues Steeper Cut
S&P Global Ratings delivered an even sharper revision, cutting its 2026 Philippine growth forecast to 2.9 percent from 4.1 percent — described as the steepest downgrade among Asia-Pacific economies it covers.
The ratings firm said weak government investment, high energy costs, and elevated food prices are weighing on domestic demand. It also lowered its 2027 forecast to 5.4 percent from 5.8 percent and its 2028 projection to six percent from 6.2 percent.
S&P economist Vishrut Rana noted that first-half growth came in below expectations amid a pullback in public capital spending, an energy price shock, and higher food prices partly linked to El Niño conditions.
“It will take some time for the economy to recover its footing,” Rana said, adding that elevated energy and food prices, together with tighter monetary policy, will continue to weigh on demand even as medium-term drivers such as BPO and private investment remain intact.
What It Means for Filipinos
Taken together, the twin downgrades signal a more cautious year for jobs, household spending, and business confidence. Sustaining investment, managing inflation, and restoring the pace of public infrastructure spending will be key as the country works through a tougher growth environment in 2026.
