THE International Monetary Fund (IMF) and Asian Development Bank (ADB) have lowered their forecasts for Philippine economic growth, noting a weaker-than-expected first quarter, the lingering effects of a massive corruption scandal and the impact of the war in the Middle East.
In its latest World Economic Outlook, the IMF said it now expected the country to grow by 3.9 percent this year instead of 4.1 percent, while the ADB forecast was slashed to 3.8 percent from 4.4 percent in an Asian Development Outlook update.
Both projections — a slowdown from 2025’s 4.4-percent result — fall within the government’s 3.5- to 4.5-percent target for 2026, which was recently revised from 5.0–6.0 percent after growth slowed to 2.8 percent in the first quarter.
“This reflects a weaker than expected outturn in 2026 Q1 (2.8 percent) alongside a larger-than-expected effect of the war in the Middle East on prices and activity in the Philippines,” an IMF spokesperson said in an email.
The ADB, meanwhile, said: “The Philippines saw a downward adjustment in growth projections due to delayed investments, softer private consumption amid higher commodity prices and climate-related risks.”
Both the IMF and ADB also lowered their forecasts for next year to 5.5 percent and 5.3 percent, respectively, from 5.8 percent and 5.5 percent — within the government’s 5.0- to 6.0-percent goal for the next four years.
The IMF said “favorable base effects, alongside a gradual pickup in investment as confidence improves and supply-side effects related to the war ease” could help the country to regain its strength next year.
Inflation risks, meanwhile, were said to be tilted to the upside. “[G]eopolitical tensions in the Middle East and higher food prices, de-anchoring of inflation expectations, tighter global monetary conditions, and lower remittances” could further push the rate higher than target, it added.
The IMF has previously forecast 4.3-percent inflation for 2026, above the Bangko Sentral ng Pilipinas’ (BSP) 2.0- to 4.0-percent goal, and an easing to 3.2 percent next year.
The ADB, meanwhile, raised its forecast for Philippine inflation to 5.9 percent from 4.0 percent for this year. That for 2027 was also increased to 3.9 percent from 3.5 percent.
“The upward revisions reflect higher global energy and food prices linked to the Middle East crisis, as well as exchange rate pressures that have raised import costs across the subregion,” the Manila-based lender said.
The BSP, which has raised key interest rates twice this year in response to inflationary pressures, expects consumer price growth to top 4.0 percent this year and the next before slightly settling above 3.0 percent in 2028.