The Asian Development Bank and S&P Global Ratings both cut their 2026 growth forecasts for the Philippines this week, with the ADB lowering its estimate from 3.8% to 3.3% and S&P cutting from 4.1% to 2.9% — the largest downgrade S&P made among the 14 economies it reviewed. Both numbers land below the Marcos administration's own 3.5%-to-4.5% target for the year, and both institutions pointed, in part, to the same source of drag: a corruption scandal that has shaken confidence, and a sharp pullback in the government spending that was supposed to be carrying growth.
State infrastructure spending contracted 32.4% in the period the two institutions reviewed, even as the economy grew just 2.6% in the first half of the year — well under what forecasters had expected going in. S&P economist Vishrut Rana cited "weaker-than-expected first-half growth" and warned that "tighter monetary policy will continue to weigh on domestic demand." ADB Country Director Andrew Jeffries put the fix in terms the government has yet to deliver on: "Timely government spending on planned investments especially in the social sector and critical infrastructure projects will be important."
Analysis: Neither institution spelled out the mechanism in so many words, but the numbers invite the connection. The flood-control kickback scandal that has dominated Philippine headlines for months — and that has already put a former House Speaker in detention on a ₱7.44-billion plunder charge — is the same scandal that triggered heightened scrutiny of DPWH disbursements, the agency that accounts for the bulk of state infrastructure spending. The government's own accountability push, in other words, may be showing up as a drag in the same growth data that the scandal itself helped depress through the confidence channel. No Philippine economic official has yet addressed that tension directly.
Both institutions also cut their 2027 outlook — ADB from 5.3% to 5.1%, S&P from 5.8% to 5.4% — meaning the downgrade is not being treated as a one-year blip. Inflation forecasts moved the other direction: ADB now projects 5.9% for 2026, nearly double the Bangko Sentral ng Pilipinas' 3% target, before easing to 4.4% in 2027. Household consumption, the traditional cushion for Philippine growth, rose just 2.8% — thin enough that neither forecaster is counting on consumers to offset the infrastructure shortfall.
The Marcos administration had not publicly responded to either downgrade as of this writing, and neither the Department of Finance nor the Department of Economy, Planning, and Development has said how, or whether, the 2027 budget currently before Congress will be adjusted to reflect growth expectations now running as much as 1.6 percentage points below the government's own floor.
Context
The downgrades follow a string of weak external data this year, including a balance-of-payments deficit already worse than all of 2025 and forecasts of the peso sinking to a record low by year-end — signs, taken together, of an economy absorbing both a corruption scandal and its own government's response to it.
Sources
- ADB, S&P slash PH GDP growth forecasts for 2026 — Inquirer.net, Sept. 24, 2026