IMF and ADB cut Philippine 2026 growth forecasts to 3.4% and 3.3%

Facts

IMF: at the end of its 2026 Article IV mission (press release of 25 September 2026), IMF staff projected real GDP growth of 3.4% in 2026 (cut from 3.9% in the IMF's previous projection) and 5.1% in 2027 (cut from 5.5% in the IMF's previous projection). ¹ Average inflation is projected at 5.6% in 2026 (lowered from 5.7% in the IMF's previous projection) and 4.1% in 2027 (raised from 3.3% in the IMF's previous projection). ² The government's 2026 growth target is 3.5–4.5%. ³ Staff described the monetary policy stance as approximately neutral, with further tightening conditional on headline inflation staying elevated or second-round effects intensifying, and said systemic financial risks remain contained, while flagging weakening asset quality in the construction sector, rising leverage among the largest corporates and bank interconnectedness with conglomerates. Mission chief Andrea Pescatori described a "challenging conjuncture".

ADB: the Asian Development Outlook September 2026 (23 September) cut the 2026 growth forecast to 3.3% (cut from 3.8% in ADO July 2026) and 2027 to 5.1% (cut from 5.3% in ADO July 2026). ⁴ It kept 2026 inflation at 5.9% (unchanged from ADO July 2026) and raised 2027 to 4.4% (raised from 3.9% in ADO July 2026). ⁵ ADB reports household spending growth of 2.9% in the first half of 2026, down from 5.2% a year earlier, as food and oil prices reduced real incomes. ⁶

S&P Global Ratings: in forecasts reported on 24 September, it cut its 2026 forecast to 2.9% (cut from 4.1%), citing a pullback in public capital spending, an energy price shock and elevated food prices. ⁷

Analysis

The three forecasts cluster between 2.9% and 3.4% for 2026, all below the bottom of the government's range. Inflation projections for 2026 range from the IMF's 5.6% to ADB's 5.9%, against the BSP's own June baseline of 6.4% and August CPI of 6.1%; both lenders have raised their 2027 inflation projections, which pushes the return to the 2–4% target further out.

Across the region, the same ADB edition moved in the opposite direction for Malaysia (raised to 4.9%) and kept Indonesia at 5.2%. The Philippines is the only one of the three where the growth forecast is falling while the inflation forecast stays near or above 4.4% into 2027, a combination that squeezes real household income.

For consumer lenders, the relevant contrast is between slowing household spending (2.9% in the first half) and bank consumer loans still growing 17.1% in July (down from 17.8% in June; eleventh consecutive monthly slowdown). Credit growing several times faster than consumption, during a real-income squeeze, is the pattern that usually precedes a rise in consumer arrears; the consumer-loan NPL ratio reported earlier this month is the indicator to watch.

Implications

Counterpoints and uncertainties

Forecasts can move quickly: the IMF expects a rebound to 5.1% in 2027 if public investment recovers, and a faster-than-expected fall in oil or rice prices would ease inflation and support real incomes. The IMF figures come from an end-of-mission statement; the Staff Report, still to go to the Executive Board, may revise them.