THE Philippines is expected to post the second-highest economic growth in Southeast Asia this year despite the downgrade in growth outlook due to external headwinds, a report released by the Asian Development Bank (ADB) showed.
In its Asian Development Outlook July 2025 report released on Wednesday, July 23, the ADB said Philippine economic growth is expected to settle at 5.6 percent this year.
The growth outlook for the Philippines is the second highest in Southeast Asia, next to Vietnam’s 6.3 percent.
Indonesia is projected to grow by five percent, Malaysia by 4.3 percent, Singapore by 1.6 percent and Thailand by 1.8 percent.
For 2026, growth is expected to slightly pick up to 5.8 percent.
The ADB’s latest projection, however, was lower than its six percent for 2024 and 6.1 percent for 2025 economic growth forecast amid external headwinds.
The Philippine economy grew by 5.4 percent in the first quarter of the year.
“Domestic demand grew 6.7 percent, supported by easing inflation and monetary policy. However, net exports dragged on growth as brisk imports outpaced exports,” the ADB said.
It added that the manufacturing index recovered slightly to 50.7 in June from 50.1 in May.
Positive consumer sentiment
“Consumer sentiment was positive in the near term. Unemployment was low at 3.9 percent in May and remittance growth of three percent helped sustain household spending,” it said.
The ADB, however, said that business confidence softened amid heightened global policy uncertainties.
According to the ADB, economic forecasts for most countries in Southeast Asia have been downgraded for 2025 and 2026 due to the continuing global growth slowdown and increased trade uncertainty.
“Weaker external conditions have hurt business and consumer sentiment and threaten to disrupt investment in the subregion,” it said.
“Except for Indonesia, the largest economy in the subregion, all Southeast Asian economies are expected to post weaker growth in the next two years.”
The ADB, meanwhile, slashed its 2025 headline inflation projection to 2.2 percent from the previous three percent forecast.
For 2026, the ADB expects inflation to settle at three percent. / PNA