ADB, AMRO turn bearish on Philippine economy

MANILA, Philippines —  The Asian Development Bank (ADB) and the Association of Southeast Asian Nations Plus 3 (ASEAN+3) Macroeconomic Research Office (AMRO) have trimmed growth forecasts for the Philippines for this year and the next due to slower global growth and heightened trade uncertainties from the imposition of reciprocal tariffs by the United States.

In its Asian Development Outlook for July 2025 released yesterday, the ADB said it revised down its 2025 economic growth forecast for the Philippines to 5.6 percent from six percent previously.

This is within the government’s revised growth target of 5.5 to 6.5 percent for this year.

For 2026, the multilateral lender also slashed its growth forecast for the Philippines to 5.8 percent from the previous 6.1 percent. This is below the government’s revised growth goal of six to seven percent for next year.

The ADB revised its growth forecasts for the Philippines amid external headwinds.

Philippine economic growth was at 5.4 percent in the first quarter, slightly faster than the previous quarter’s 5.3 percent, but lower than the 5.9 percent growth in the same period last year.

The ADB also downgraded its growth outlook for Southeast Asia for 2025 and 2026 “due to the continuing global growth slowdown and increased trade uncertainty.”

In particular, the ADB lowered the 2025 growth forecast for Southeast Asia to 4.2 percent from 4.7 percent previously.

For next year, the ADB downscaled its growth forecast for Southeast Asia to 4.3 percent from the previous expectation of 4.7 percent.

“Weaker external conditions have hurt business and consumer sentiment and threaten to disrupt investment in the subregion,” the ADB said.

The report also showed that ADB revised its inflation forecast for the Philippines for this year to 2.2 percent from three percent previously.

For 2026, ADB maintained its inflation forecast for the Philippines at three percent.

Meanwhile, AMRO’s Quarterly Update of the ASEAN+3 Regional Economic Outlook report released yesterday also showed that the growth forecast for the Philippines for this year was revised downward to 5.6 percent from 6.3 percent previously.

For next year, AMRO’s growth forecast for the Philippines was slashed to 5.5 percent from the previous estimate of 6.3 percent.

“The tariff impact on the Philippines itself, the direct impact itself is not very large compared to other parts of the region, given the more domestic centric structure of the Philippines’ economy, but there will be broader impact on the global slowdown on the economy,” Allen Ng, group head and principal economist at AMRO, said in a press conference yesterday.

US President Donald Trump said a 19-percent tariff would be imposed on Philippine goods starting Aug. 1, following negotiations with President Marcos.

While this is lower than the 20-percent tariff that the US announced earlier this month, it is higher than the initial 17-percent tariff set in April.

Ng said the US tariff would affect exports as well as business sentiments and investment activities in the Philippines.

“Despite the revision downwards, I think it’s important to emphasize that the growth in the Philippines continues to be very robust and it will continue to be driven by robust private consumption activities, given multiple factors, including continued stable labor market conditions, slower inflation currently and also expectation of robust remittances going forward,” Ng said.

AMRO expects inflation to average 1.8 percent this year, lower than the previous forecast of 3.3 percent. For 2026, its inflation forecast is unchanged at 3.2 percent.

Inflation rose slightly to 1.4 percent in June from the previous month’s 1.3 percent, but was lower than the 3.7 percent print in the same month last year.

Despite the US tariffs, Department of Economy, Planning and Development Secretary Arsenio Balisacan expects second quarter economic growth to be slightly faster than the first quarter.

In terms of the second quarter economic performance, Balisacan told reporters yesterday on the sidelines of the Artificial Intelligence Conference that he expects it to be “a little faster” than the previous quarter.

“The lag effects of interest rate cuts, inflation, should be already kicking in,” Balisacan said.

While there are uncertainties due to external developments including the US tariffs, he said domestic demand is saving the Philippine economy.