Uncertainties seen tempering PH growth
- Ziggurat Realestatecorp
- Oct 2
- 2 min read
Philippine economic growth will likely slow this year due to external headwinds, the Asian Development Bank (ADB) reiterated on Tuesday as it kept its forecast for 2025 and lowered that for next year.
In the September edition of its Asian Development Outlook (ADO), the Manila-based lender maintained the 2025 gross domestic product (GDP) growth projection announced in a July supplement. It was a higher 6.0 percent in the April ADO.
If realized, GDP growth will have slowed from last year’s 5.7 percent but hit the government’s downwardly revised 5.5- to 6.5-percent target. The 2024 result, which fell below the 6.0- to 6.5-percent goal for that year, was attributed in part to a series of typhoons.
Unilateral tariff increases initiated by US President Donald Trump and heightened geopolitical tensions, meanwhile, prompted the government to lower its 2025 and 2026-2028 targets in June.
While the ADB forecast for this year falls within the updated range, that for 2026 — a reduced 5.7 percent compared to the 5.8 percent in June and 6.1 percent in April — is lower than the new 6.0- to 7.0-percent target.
“External headwinds and heightened uncertainty over global economic policies have weighed down trade and investment prospects,” ADB Country Director Andrew Jeffries told a briefing.
A 19-percent tariff rate levied by the US on Philippine exports, which took effect in August, is expected to have an impact on outbound shipments. However, solid domestic demand — seen remaining the main engine of growth — should provide an offsetting effect.
The rate — down from the 20 percent threatened in July but higher than the 17 percent announced in April — is seen as offering little in terms of a strategic trade advantage over neighboring Southeast Asian economies.
Still, the ADB said that Philippine growth would remain strong and Jeffries said “sustained government investments, including for social services, is seen boosting domestic demand.”
“The Philippines’ growth outlook remains resilient amid a global environment of shifting trade and investment policies and heightened geopolitical uncertainties,” he added.
“Though these uncertainties pose increased risk, we see strong domestic demand anchoring growth, with sustained investments and an accommodative monetary policy supporting the economy’s expansion.”
Asked whether an ongoing corruption scandal would have an impact, Jeffries said: “We didn’t see a reason at this point in time to reduce those GDP projections due to that issue.”
“But it’s certainly a heightened risk,” he added.
“Between now and our December update, there may be more quantifiable data available that may alter our projections.”
Jeffries said that while the ADB takes “corruption and public financial management very seriously,” it is also mandated to “support our developing member country governments and to help solve complicated projects, not to shy away from helping solve such projects.”
“We have very strong due diligence on the financial management capabilities of our borrowers and any gaps found are built into the project to mitigate financial management risks.”
He added that the ADB requires audited, project-level financial statements from approved auditors for ongoing expenses. Loan disbursements are also strictly monitored to ensure that funds are released only when contracted construction milestones are met.
“So we take this very seriously and... we actually see potentially more support being asked of us to help address this problem going forward,” Jeffries said.
Source: Manila Times
Comments