The Asian Development Bank (ADB) said Wednesday the Philippine remains among the fastest-expanding economies in Southeast Asia, with a growth rate of at least 6 percent for 2025 and 2026.
“In the Philippines, growth is forecast to edge higher to 6 percent in 2025 and 6.1 percent in 2026, as easing inflation, rising employment, and steady remittances will boost household spending,” the Manila-based lender said in its April edition of the Asian Development Outlook (ADO).
The ADB’s growth forecasts for the Philippines fall within the Development Budget and Coordination Committee’s (DBCC) 6-percent to 8-percent target range for 2025 to 2028.
It said the implementation of public infrastructure projects is expected to support growth.
The growth forecasts were finalized before the US administration’s April 2 announcement of new tariffs, so the baseline projections only reflect tariffs previously in place, the ADB said.
It said, however, the ADO April 2025 includes an analysis of how higher tariffs may affect growth in Asia and the Pacific.
“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,” said ADB country director for the Philippines Pavit Ramachandran.
The ADB said increased 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, the report said.
The Philippine economy is forecast to outpace Indonesia (5 percent this year, 5.1 percent next year), Malaysia (4.9 percent and 4.8 percent), and Thailand (2.8 percent and 2.9 percent) in terms of economic growth for this year and the next.
Vietnam’s economy is projected to grow at a faster pace than the Philippines, with forecasts of 6.6 percent this year and 6.0 percent next year.
The ADB forecasts inflation to remain within the government’s target range of 2 percent to 4. percent, averaging 3 percent in 2025 and 2026. This reflects stable global commodity prices, particularly oil, and a slowdown in rice inflation.
It said the economic expansion would be fueled by rising employment with the jobless rate at 4.3 percent in January 2025 against 4.5 percent in January 2024, which translates into an additional 2.6 million jobs generated within the period.
“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,” it said.
ABB also said more jobs will be created 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.
Public expenditure is expected to rise with the 9.7-percent increase in the national budget for 2025. A third of the budget will fund social services including national health insurance, education, skills training and livelihood programs, conditional cash transfers and food vouchers to low-income families.
The ADB is supporting the Pantawid Pamilyang Pilipino Program under the Expanded Social Assistance Program and is preparing to help finance the Walang Gutom (Zero Hunger) Food Voucher Program.