The Asian Development Bank (ADB) has revised down the growth forecast for the Philippines along with economies in developing Asia and the Pacific this year and next year on expectations of reduced exports amid higher U.S. tariffs, global trade uncertainty, and weaker domestic demand.
In its Asian Development Outlook (ADO) July 2025, the Manila headquartered multilateral bank lowered the the GDP forecast for the Philippines to
5.6 percent in 2025 and 5.8 percent in 2026, from 6.0 percent and 6.1 percent, amid external headwinds.
In reducing their growth projection for the country, the ADB Outlook noted that the country GDP growth in Q1 2025 was lower than expected at 5.4 percent. Domestic demand grew 6.7 percent, supported by easing inflation and monetary policy. However, net exports dragged on growth as brisk imports outpaced exports. The manufacturing PMI recovered slightly to 50.7 in June from 50.1 in May. Business confidence softened amid heightened global policy uncertainties. Consumer sentiment was positive in the near term. Unemployment was low at 3.9 percent in May, and remittance growth of 3.0 percent helped sustain household spending.
For the Asia and the Pacific, ADB forecasts the region’s economies will grow by 4.7 percent this year, a 0.2 percentage point decline from the projection issued in April. The forecast for next year has been lowered to 4.6% from 4.7 percent.
Hardest hit
Economies in Southeast Asia will likely be hardest hit by worsened trade conditions and uncertainty.
ADB now predicts the subregion’s economies will grow 4.2 percent this year and 4.3 percent next year, down roughly half a percentage point from April forecasts for each year.
Prospects for developing Asia and the Pacific could be dented further by an escalation of U.S. tariffs and trade tensions. Other risks include conflicts and geopolitical tensions that could disrupt global supply chains and raise energy prices, and a worse-than-expected deterioration in the property market of the People’s Republic of China (PRC).
“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 ADB Chief Economist Albert Park. “Economies in the region should continue strengthening their fundamentals and promoting open trade and regional integration to support investment, employment, and growth.”
China
Growth projections for the PRC, the region’s largest economy, are maintained at 4.7 percent this year and 4.3 percent next year. Policy stimulus for consumption and industrial activity is expected to offset continuing property market weakness and softening exports.
India, the region’s second-largest economy, is forecast to grow by 6.5 percent this year and 6.7 percent next year—down 0.2 and 0.1 percentage points, respectively, from April projections—as trade uncertainty and higher U.S. tariffs affect exports and investment.
Bucking the downward trend are economies in Caucasus and Central Asia. The subregion’s growth projections have been raised by 0.1 percentage points for both this year and next to 5.5 percent and 5.1 percent, respectively, largely reflecting an anticipated boost in oil production.
Inflation in developing Asia and the Pacific is projected to continue slowing, amid easing oil prices and strong farm output reducing food price pressures. ADB forecasts regional inflation of 2.0 percent this year and 2.1 percent next year, compared with its April projections of 2.3 percent and 2.2 percent, respectively.
