ADB cuts 2026 PH GDP growth forecast to 4.4%

The Philippines may grow below the regional average this year amid the war in the Middle East, according to the Asian Development Bank’s (ADB) latest projections, which also suggested that the Marcos administration could miss its growth target for a fourth consecutive year.

In its latest Asian Development Outlook report released Friday, the Manila-based lender cut its 2026 Gross Domestic Product (GDP) growth projection for the country to 4.4 percent, from the previous estimate of 5.3 percent.

If realized, the pace would match last year’s expansion. But it would also fall short of the government’s 5-percent to 6-percent target for 2026—extending a streak of missed growth goals that began in 2023.

The projections also underscored the domestic economy’s high vulnerability to the ongoing oil crisis compared to its peers. The ADB’s downgraded outlook places Philippine growth below the 5.1-percent forecast for developing Asia.

Within Southeast Asia, which is expected to expand by 4.6 percent on average, the Philippines would trail Vietnam (7.2 percent), Indonesia (5.2 percent), Malaysia (4.6 percent) and Cambodia (4.5 percent).

Next year, the economy is projected to grow 5.5 percent, matching the low end of the government’s 5.5-percent to 6.5-percent goal. Even so, the prediction would fall short of the economy’s estimated growth potential of about 6 percent.

“The Philippines is highly exposed given its heavy reliance on imported crude oil and refined oil products,” the ADB said. “Other transmission channels include possible disruption in remittances from overseas Filipinos, tighter financial conditions, and weaker investor and consumer sentiment.”

Last Wednesday, both the United States and Iran claimed victory after agreeing to a two-week ceasefire, pausing a devastating conflict that had upended a global economy already grappling with rising trade protectionism and rapid artificial intelligence disruption.

The war triggered a historic oil shock that prompted the Philippines to declare a national energy emergency, becoming the first country to do so. Already, domestic inflation rose to a near two-year high of 4.1 percent in March, exceeding forecasts and breaching the central bank’s 2-percent to 4-percent target range.

The ADB said Philippine inflation could average 4 percent this year, up from its prior forecast of 3 percent. The bank sees price gains easing to 3.5 percent next year.

The flare-up in consumer prices has already fueled expectations of interest rate hikes, which could disrupt the economy’s recovery from a recent confidence shock tied to a major corruption scandal.

Andrew Jeffries, the ADB’s country director for the Philippines, said the oil crisis may prompt the government to rethink its borrowing plans amid tight fiscal space and sticky interest rates, a shift that could also affect the bank’s financing pipeline for the country.

Even so, Jeffries said the ADB was ready to provide support to its developing members.

“So, there is some uncertainty around our loan program going forward,” he said.