The Asian Development Bank (ADB) cut its 2026 growth forecast for the Philippines to 3.3%, amid weaker public investment and softer household consumption.

In its Asian Development Outlook (ADO) September 2026 report, the Philippine-based multilateral lender lowered its Philippine gross domestic product (GDP) growth forecast to 3.3% from the 3.8% projection it made in July.

“In the Philippines, weak public investment contributed to the 2026 downgrade from 3.8% to 3.3%, although a rebound is expected to support growth of 5.1% in 2027,” it said in the report.

It added that household consumption remained subdued due to high inflation and weak consumer confidence.

The latest forecast is below the Philippine government’s revised 3.5-4.5% GDP target for 2026. If realized, GDP growth will be slower than the 4.4% in 2025.

At 3.3%, the Philippine economy will be among the slowest-growing economies in Developing Southeast Asia, ahead only of Brunei Darussalam’s 1.2%, Thailand’s 2% and Myanmar’s 2.2%.

The Philippine economy will trail Vietnam (7.8%), Indonesia (5.2%), Malaysia (4.9%), the Lao People’s Democratic Republic (4%), Timor-Leste (4%) and Cambodia (3.9%).

Meanwhile, the ADB trimmed its 2027 Philippine growth forecast to 5.1% from 5.3% previously, placing it at the lower end of the government’s revised 5%-6% target.

“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 on Wednesday.

“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.

Meanwhile, the ADB maintained its inflation forecast for 2026 at 5.9%, but raised its projection to 4.4% in 2027 from 3.9% in July.

Inflation eased to 6.1% in August from 6.2% in July, bringing the first eight-month average to 5.2%. — Justine Irish D. Tabile