Philippines Can Still Reach 3.8% Growth Target, ADB Says

The Philippine economy could still achieve 3.8% growth this year, but a stronger recovery in public investment and household spending will be essential, according to the Asian Development Bank (ADB).

ADB President Masato Kanda said the target remains achievable despite a weak first half of the year. However, he stressed that infrastructure projects need to move more quickly during the second half, while consumer spending also needs to regain momentum.

Infrastructure Spending Becomes a Key Factor

A major challenge for the Philippine economy has been the slow implementation of public infrastructure projects. Kanda said the problem is increasingly connected to project execution rather than a lack of financing.

Government spending on infrastructure has fallen significantly, contributing to weaker construction activity and investment. The ADB is working with Philippine government agencies to improve procurement, contract management and project delivery.

The bank believes faster implementation of approved projects could provide an important boost to economic activity during the remainder of the year.

Consumer Spending Under Pressure

Household consumption has also weakened. Higher prices have reduced consumers’ purchasing power, while inflation remains above the government’s preferred range.

The country’s economic growth slowed to 2.3% in the second quarter, following 2.8% growth in the first quarter. Household consumption expanded by only 2.8% during the second quarter, indicating softer domestic demand.

Inflation eased slightly in August, but price pressures remain an important concern for policymakers and households.

External Risks Remain

The ADB has also warned that developments outside the Philippines could affect the growth outlook. Higher energy, food and fertilizer prices caused by geopolitical tensions could put additional pressure on inflation and household budgets.

The lender also sees potential risks to remittances, tourism and financial conditions if global uncertainty increases.

Outlook Could Improve

Despite the challenges, the ADB remains relatively positive about the medium-term outlook. If infrastructure spending accelerates and inflation pressures ease, economic growth could strengthen considerably next year.

The ADB currently expects Philippine growth to reach 5.3% in 2027, compared with its 3.8% projection for the current year.

The latest assessment suggests that the Philippines’ near-term economic performance will depend heavily on how quickly delayed public projects are implemented and whether households regain confidence to increase spending.