The Asian Development Bank (ADB) lowered its 2026 growth forecast for the Philippine economy to 3.3 percent but added the country is projected to regain economic momentum next year.

The updated forecast are slower than the July 3.8 percent GDP projection of ADB this year.

The September Asian Development Outlook reported that "investment remained weak in the Philippines, owing to constrained public infrastructure spending".

“The economy continues to feel the impact of the Middle East conflict, but business indicators point to expected improvements in economic activity, with the industry sector still looking to expand next year,” ADB Philippines country director Andrew Jeffries said.

“For the Philippines to ride through the effects of external and domestic shocks in the near term, timely government spending on planned investments especially in the social sector and critical infrastructure projects will be important," he added.

The report also stressed that the Philippine economy will return to an upward growth in 2027 backed by expected upticks in the services and industry sectors and timely government spending, including on critical infrastructure.

"A stronger 2027 is on the horizon. Our latest ADO (Asian Development Outlook) 2026 projects the Philippines to grow by 5.1 percent in 2027, supported by a recovery in public investment, continued strength in services, and resilient demand for exports," it said.

"While near-term challenges persist, planned investments in infrastructure, health, education, and climate resilience are expected to help sustain economic momentum," the report added.

The ADB report reported that Inflation is expected to average at 5.9 percent in 2026, same as the July forecast, before slowing to 4.4 percent in 2027, slightly higher than the 3.9 percent projected in the July report.

The report shows that food prices continue to be a key contributor to inflation and will likely remain under pressure with the effects of El Niño on agricultural output. Robina Asido/PHS