ADB downgrades PH economic growth outlook for 2025, 2026

Multilateral lender Asian Development Bank (ADB) has downgraded its economic growth forecast for the Philippines and developing Asia and the Pacific for this year and the next, citing external headwinds such as global trade uncertainty and weaker domestic demand.

In its Asian Development Outlook (ADO) released on Wednesday, the ADB said it now expects the Philippine economy to grow 5.6% this year, slower than the 6.0% it forecast in April. It also revised its 2026 growth outlook downward to 5.8% from 6.1%.

"The ADB has lowered its growth forecasts for economies in developing Asia and the Pacific this year and next year. The downgrades are driven by expectations of reduced exports amid higher United States tariffs and global trade uncertainty, as well as weaker domestic demand," the ADB said in a separate statement.

Economic officials last month slashed the economic growth target to average between 5.5% to 6.5% this year, and 6.0% to 7.0% for 2026 to 2028, also citing the imposition of reciprocal tariffs by the United States.

US President Donald Trump earlier announced a reduction on the tariff rate for goods from the Philippines to 19% from 20% previously with zero tariffs for US goods, after what he called a "beautiful visit" by President Ferdinand "Bongbong" Marcos Jr.

Marcos, the first Southeast Asian leader to meet Trump in his second term, said the agreement was a "significant achievement," as he clarified that the zero tariffs will only apply to certain markets.

The ADB also downgraded its 2025 growth outlook for Southeast Asia to 4.2% from 4.7% previously, and for 2026 to 4.3% from 4.7%.

"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," ADB Chief Economist Albert Park said.

"Economies in the region should continue strengthening their fundamentals and promoting open trade and regional integration to support investment, employment, and growth," he added.

Aside from tariffs, the ADB also cited the first quarter expansion of 5.4%, which was lower than expected, along with other macroeconomic figures.

"Domestic demand grew 6.7%, supported by easing inflation and monetary policy. However, net exports dragged on growth as brisk imports outpaced exports," it said.

Latest data available from the Philippine Statistics Authority (PSA) show that the trade gap posted a $3.290-billion deficit in May, as exports stood at $7.288 billion and imports at $10.578 billion. — VDV, GMA Integrated News