The Asian Development Bank (ADB) will revise its 2026 economic forecast for the Philippines downward following the third-quarter slowdown triggered by the flood control projects scandal.
In an interview at Dusit Thani in Makati on 4 December, ADB Country Director Andrew Jeffries confirmed that the multilateral lender will cut its growth projections for both 2025 and 2026 in its upcoming Asian Development Outlook report.
“We are revising things downward,” Jeffries said, emphasizing that “in light of” the ongoing governance issues tied to the anomalous flood control project scandal, the ADB would be lowering its estimates for the current year and the next.
Sharp deceleration in third quater
In its September outlook, the ADB projected 2025 growth at 5.8 percent — within the government’s target of 5.5 to 6.5 percent. But the third quarter delivered a sharp deceleration, with gross domestic product (GDP) plunging 1.5 percentage points to 4.0 percent.
The downturn was driven largely by a collapse in public construction as authorities suspended and reviewed flood control programs implicated in the corruption controversy.
The ADB previously forecast 2026 growth at 5.6 percent, below the government’s 6 to 7 percent target. Jeffries confirmed that this projection will also be revised downward.
Despite these headwinds, Jeffries said the ADB expects a relatively swift recovery once confidence stabilizes and government spending resumes.
Swift recovery
“We think it’s going to recover faster than that. So we predict, and I think it’s consistent with what we’ve seen from others today, that next year there will be growth compared to this year,” he said.
His remarks align with those of Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr., who said last week that the economic rebound should begin by mid-2026. “The recovery should start by 2026, maybe [the] middle of 2026, and then we should be back on track by 2027,” Remolona said.
Restoration of Investor confidence
Jeffries also stressed that restoring investor confidence hinges on meaningful reforms and accountability for those involved in the “floodgate” scandal.
“I mean, of course, accountability is part of any kind of legal system,” he said. “I guess it’s not necessarily, you know, all a consistent story on sentiment. But what can the government do about it, I think, is just take the concerns seriously and push forward with some of the changes and reforms and improvements that have been talked about.”
The updated Asian Development Outlook will be released on Wednesday, 10 December — one day before the BSP’s Monetary Board convenes for its policy meeting.