While the Philippines is poised to sustain robust economic growth despite the threat posed by United States (US) President Donald Trump's tariffs, the Asian Development Bank (ADB) is urging the government to fast-track the implementation of big-ticket infrastructure projects to stimulate domestic public investment and consumption.
The Manila-based multilateral lender, in its Asian Development Outlook report for April 2025, projected the Philippines' gross domestic product (GDP) to grow by a faster six percent this year, compared to last year's below-expectations 5.7-percent economic expansion.
If the ADB's forecast is achieved, this year's growth will hit the lower end of the government's more ambitious six- to eight-percent goal.
In Southeast Asia, Philippine growth this year is estimated to be only behind Vietnam's 6.6 percent and Cambodia's 6.1 percent.
However, the ADB's latest growth forecast for the Philippines is a downgrade from its previous projection for 2025, which was 6.2 percent.
Teresa Mendoza, senior economics officer at the ADB's Philippines country office, told a press briefing on Wednesday, April 9, that the "slight" outlook downgrade took into consideration the lower-than-expected growth in the fourth quarter of last year amid also slower-than-anticipated household spending during the holiday season.
Mendoza said dampened consumption towards the end of 2024 reflected the lagged effects of previously high inflation and tight monetary policy.
Despite the lower forecast for 2025, which was finalized before Trump announced the 17-percent reciprocal tariffs on Philippine imports last April 2, Mendoza said the country's growth remains robust, with the momentum supported by improving fiscal metrics, proactive economic reforms, and sustained infrastructure rollout.
The ADB also expects inflation to further ease to an average of three percent this year from 3.2 percent last year, after hitting six percent in 2023—the highest annual rate of consumer price increases since the global financial crisis in 2008.
"The Philippines remains a bright spot in the Southeast Asian region, with robust private consumption and sustained investments, particularly on infrastructure, continuing to fuel growth," ADB country director for the Philippines Pavit Ramachandran said in a statement.
The ADB noted that the government aims to maintain public infrastructure spending at five to six percent of GDP over the medium term, with an average of 5.8 percent from 2022 to 2024, under the current Marcos administration.
It added that a flagship project management office has been established to oversee large-scale transportation projects, including projects financed by ADB loans, such as Bataan-Cavite interlink bridge, Malolos-Clark railway, and South commuter railway.
Ramachandran disclosed that the second loan tranche for the Malolos-Clark North-South commuter railway (NSCR) is expected to be approved by the ADB board in a few days.
But Ramachandran still urged the Philippines to address existing infrastructure and logistics bottlenecks as one way to shield the economy from the impact of Trump's tariffs.
Responding to Manila Bulletin's question if the ADB is satisfied with the pace of implementation of the projects it finances, Ramachandran acknowledged that since major infrastructure projects are "complex," they encounter complications, such as right-of-way (ROW) problems, which affect not only residences but also utility lines.
The lack of ROW has been flagged as a major cause of delay for many transport infrastructure projects in the country.
"We are pleased that the new DOTr leadership has taken this on as a central focus, in coordination with local government units (LGUs)," said Ramachandran, referring to newly appointed Department of Transportation Secretary Vivencio Dizon, who has committed to address ROW concerns.
With land ownership and resettlement issues being prioritized by Dizon and the Department of Public Works and Highways (DPWH), "we're optimistic that [projects] will move much faster now," Ramachandran said.
Also asked by Manila Bulletin if allowing 100-percent foreign land ownership may be key to fast-tracking ROW acquisition by financial institutions like the ADB for the projects it funds, Ramachandran replied: "I don't think we need to push that at this stage," given the "tangible" progress in addressing pending issues under Dizon's watch.
As for the recent Congressional practice of relegating major infrastructure projects into the unprogrammed appropriations of the yearly national budget, Ramachandran said that the ADB is "in discussions with [implementing] agencies to mitigate that."
Since these are not covered by regular budget funds, unprogrammed appropriations can only be financed when there are excess or new tax and non-tax revenue collections, as well as foreign loans. The lack of programmed budget financing usually also delays projects lodged into unprogrammed appropriations.
According to reports at the start of the year, the record ₱6.352-trillion 2025 national budget included up to ₱363.2 billion in unprogrammed appropriations, which cover budgets for the implementation of some ongoing ADB-assisted projects like Metro Rail Transit Line 4 (MRT-4) and NSCR, among others.
"We're working closely with authorities so that any budgetary constraints don't impinge on project implementation," Ramachandran said.
He said it helps that the ADB is assisting the Philippines in boosting revenue collections to make available more funds for the sustained rollout of infrastructure projects.
He added that the ADB is also pushing for public-private partnerships (PPPs), which taps tycoons' deep pockets, as a mode of implementation for many of the Marcos administration's infrastructure flagship projects (IFPs) under its Build Better More (BBM) program.