The Philippine economy will return to an upward growth path in 2027 backed by expected upticks in the services and industry sectors and timely government spending, including on critical infrastructure, according to a report released today by the Asian Development Bank.But heightened uncertainties in the global environment from a prolonged Middle East conflict and climate-related shocks, including a severe El Niño dry weather episode starting in late 2026, pose as major downside risks to the growth outlook, according to Asian Development Outlook (ADO) September 2026 report.
The new report said the country’s gross domestic product (GDP) is forecast to grow by 3.3% in 2026 before rising by 5.1% in 2027. The updated forecasts are slower than the GDP growth projection of 3.8% in 2026 and 5.3% in 2027 in the July ADO report as the prolonged Middle East conflict dampened the economy more than expected, with weaker investments in the first half this year and soaring prices of imported fuel and other vital commodities such as fertilizers.
“The economy continues to feel the impact of the Middle East conflict, but business indicators point to expected improvements in economic activity, with the industry sector still looking to expand next year,” said ADB Philippines Country Director Andrew Jeffries. “For the Philippines to ride through the effects of external and domestic shocks in the near term, timely government spending on planned investments especially in the social sector and critical infrastructure projects will be important.”
Inflation is expected to average at 5.9% in 2026, same as the July forecast, before slowing to 4.4% in 2027, slightly higher than the 3.9% projected in the July report. Food prices continue to be a key contributor to inflation and will likely remain under pressure with the effects of El Niño on agricultural output, according to the report.
The services sector, accounting for around 60% of GDP and employment, will remain a key driver of growth, along with an expected pick up in manufacturing and public construction.
The government plans to accelerate implementation of major infrastructure projects such as transport networks, railways, ports, bridges, as well as health, education, and agricultural infrastructure. It is allocating one-third of its proposed 2027 national budget for social services, such as better health services, educational assistance and early childhood development, upskilling, and conditional cash transfers and food vouchers for vulnerable families.
The government has been pursuing programs to mitigate the effects of the Middle East conflict and the El Niño phenomenon on agriculture and vulnerable sectors, such as rehabilitating irrigation facilities, raising investments in water resource management, distribution of drought-resistant seeds and inputs, and enhanced drought monitoring systems.
It has helped the poor and disadvantaged groups through targeted cash assistance, emergency livelihood support, fuel subsidies, public transport fare discounts, and support to small businesses and heavily affected sectors, including transport and agriculture, under its Unified Package for Livelihoods, Industry, Food, and Transport (UPLIFT) program. ADB is preparing assistance to the government’s Middle East conflict response via a Countercyclical Support Facility.
ADB is a leading multilateral development bank supporting sustainable, inclusive, and resilient growth across Asia and the Pacific. Working with its members and partners to solve complex challenges together, ADB harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard our planet. Founded in 1966, ADB is owned by 69 members—50 from the region.
Micheline R. MillarSenior Communications OfficerDepartment of Communications and Knowledge ManagementAsian Development Bank
PHILIPPINE 2027 GDP GROWTH SEEN TO REGAIN MOMENTUM ON AN INVESTMENT REBOUND
