Manila: The Asian Development Bank (ADB) has retained its 2025 economic growth forecast of 6 percent for the Philippines' gross domestic product (GDP) while lowering its inflation projection. The ADB maintained its GDP forecast from the December 2024 report, which was higher than the 5.6 percent growth recorded in 2024. However, the growth outlook for 2026 was slightly reduced to 6.1 percent from 6.2 percent.

According to Philippines News Agency, the Philippines continues to be a key growth area in Southeast Asia, driven by strong private consumption and sustained investments, particularly in infrastructure. ADB country director for the Philippines, Pavit Ramachandran, highlighted the country's robust economic performance. The ADB anticipates the Philippine economy to benefit from improved employment data, noting that 2.6 million new jobs were added between January 2024 and January 2025.

The ADB report also points out that higher household incomes, supported by minimum wage hikes in several regions, remittance inflows from Filipinos overseas, and election-related spending ahead of the mid-term elections in May, will bolster domestic consumption. Additionally, government spending is expected to support economic growth, with public expenditure projected to increase by 9.7 percent this year.

A significant portion of the budget is allocated to social services, including national health insurance, education, skills training, livelihood programs, conditional cash transfers, and food vouchers for low-income families. The ADB supports these social protection efforts, such as the Pantawid Pamilyang Pilipino Program, and is preparing to help finance the Walang Gutom (Zero Hunger) Food Voucher Program.

Despite these positive indicators, the ADB noted that the GDP forecast has yet to consider the potential economic impact of the 17 percent reciprocal tariff imposed by the United States on April 9. The ADB's outlook on developing Asia, which encompasses the Philippines, is projected at 4.9 percent in 2025 and 4.7 percent in 2026. The impact of US tariffs is estimated to reduce the region's GDP by 0.3 percentage points due to reciprocal tariffs and potential retaliations.

The ADB has also revised its inflation forecast for the Philippines to 3 percent for both 2025 and 2026, down from the previous estimate of 3.2 percent, reflecting stable global commodity prices, particularly oil, and a slowdown in rice inflation.