THE Asian Development Bank (ADB) expects Philippine economic growth to recover next year, driven by anticipated upticks in the services and industry sectors alongside government spending on critical infrastructure projects.
In its Asian Development Outlook (ADO) September 2026 report released Wednesday, the ADB projected the Philippine economy to grow by 5.1 percent in 2027, following an expected 3.3 percent growth for this year.
The ADB said the services sector, which accounts for about 60 percent of the country’s gross domestic product and employment, will continue to be a key driver of growth, along with the expected pick-up in manufacturing and public construction.
The government’s plan to ramp up the implementation of major infrastructure projects, such as transport networks, railways, ports, and bridges, as well as investments in health, education, and agricultural infrastructure, will also help accelerate growth.
The latest projections, however, were lower than the 3.8 percent for 2026 and 5.3 percent for 2027 earlier forecast of the ADB.
In a briefing at the ADB office in Mandaluyong City, John Beirne of the ADB Economic Research and Development Impact Department said the lower projections took into account the impact of tightening global conditions, El Niño, and energy disruptions due to the prolonged conflict in the Middle East.
ADB Principal Economics Officer Teresa Mendoza said prolonged geopolitical tensions “heightened and broadened inflationary pressures, sharply raising costs for households and businesses.”
Inflation is expected to average 5.9 percent this year, and ease to 4.4 percent in 2027.
Government programs
The ADB, however, noted that the government has been pursuing programs to mitigate the effects of the Middle East conflict and the El Niño
phenomenon on agriculture and vulnerable sectors. These initiatives include rehabilitating irrigation facilities, increasing investments in water resource management, distributing drought-resistant seeds and inputs, and enhancing drought monitoring systems.
“Support has been targeted and time-bound, with priority given to poor and vulnerable households and the most affected industries and sectors, rather than extending broad subsidies. Policy responses include both short-term measures, along with reforms focused on building resilience,” Mendoza said.
The government’s Unified Package for Livelihoods, Industry, Food, and Transport (Uplift) program provided targeted cash assistance, emergency livelihood support, fuel subsidies, public transport fare discounts, and support for small businesses and sectors heavily affected by the Middle East conflict and the El Niño phenomenon.
Moving forward, Mendoza cited the need to maintain sound macroeconomic management, sustain reforms, and accelerate investments, including in infrastructure and human development to boost medium-term growth.
“And regional integration and global linkages will help strengthen supply chain resilience and support trade, investment, and capital,” she said.
ADB Philippines country director Andrew Jeffries also underscored the importance of timely government spending on planned investments, especially in the social sector and critical infrastructure projects.
He said the Pax Silica will also help create more job opportunities in the long term.
“That initiative and others like the Luzon Economic Corridor more broadly, you know, are meant to bring specific and higher value-add foreign direct investment into the country,” Jeffries said.
“So, it would be a positive for job creation and growth, but it’s not immediate. There would be a lag. I mean, just foreign direct investment generally, depending on what it is, can take several years to build and construct.” / PNA
