The Philippine economy is set to maintain its solid growth momentum through 2026, driven by robust domestic demand and a favorable outlook for subdued inflation, according to the Asian Development Bank (ADB).
In its Asian Development Outlook (ADO) September 2025 report, the ADB projects the country’s gross domestic product (GDP) to expand by 5.6% in 2025 and 5.7% in 2026. This forecast maintains the 2025 projection while slightly adjusting the 2026 estimate from 5.8%, positioning the Philippines as one of the fastest-growing economies in Southeast Asia.
“The Philippines’ growth outlook remains resilient amid a global environment of shifting trade and investment policies and heightened geopolitical uncertainties,” said ADB Country Director for the Philippines Andrew Jeffries. “Though these uncertainties pose increased risk, we see strong domestic demand anchoring growth, with sustained investments and an accommodative monetary policy supporting the economy’s expansion.”
Favorable Inflation Environment
The report forecasts an even greater easing of inflation for 2025, slowing to 1.8%—down from the earlier projection of 2.2% in July. Inflation is then expected to rise to 3.0% in 2026, returning to the government’s target range of 2% to 4%. This subdued outlook is attributed to slower global commodity prices and muted domestic food prices, partially due to improved local supply of the country’s rice staple. This favorable inflation trajectory will support an accommodative monetary policy stance.
Drivers of Domestic Resilience
Growth is expected to be buoyed by positive consumer and business sentiment, sustained remittances from overseas Filipinos, and strong government investments. The Bangko Sentral ng Pilipinas’ Q2 2025 survey indicated positive business sentiment, and consumer outlook remains optimistic for 2026, which is crucial for private consumption.
A key factor supporting expansion is the government’s commitment to infrastructure spending, targeting 5% to 6% of GDP over the medium term. The recent signing of the Accelerated and Reformed Right-of-Way Act is expected to streamline land acquisition, significantly accelerating the rollout of major projects. This legislation will benefit key government and ADB-financed projects, including the Malolos–Clark Railway Project and the South Commuter Railway Project.
Downside Risks
While the outlook is positive, the ADB report notes potential downside risks. These include domestic pressures from adverse weather conditions and climate shocks, as the country is visited by numerous typhoons annually, which could put pressure on commodity prices. External headwinds, such as global economic policy shifts and rising trade barriers, also pose a risk to market sentiment and sustained growth.
