The World Bank (WB), Asian Development Bank (ADB) and the International Monetary Fund (IMF) have lowered their growth outlook for the Philippines.

The World Bank lowered its growth forecast for the Philippines to 3.9 percent.

The Philippine economy grew 2.8 percent in the first quarter of 2026 because of the lingering effects of the flood control controversy, delays in the release of funds for infrastructure spending, and the impact of the war in the Middle East.

Philippine inflation has eased to 6.4 percent in June, after climbing to 7.2 percent in May. The state statistics bureau, however, stressed that the Middle East conflict can still affect the country’s inflation going forward, as transportation costs still contribute substantially to the inflation number.

Meanwhile, the ADB said it forecasts the Philippine economy to grow 3.8 percent, down from 4.4 percent in April, as the impact of the Middle East crisis continues to ripple throughout the region.

In its latest Asian Development Outlook, the ADB said it is lowering growth expectations for the Philippines because of delayed investments and weaker private consumption amid higher commodity prices and climate-related risks.

The multilateral lender noted that higher energy prices are also weighing on tourism in the Philippines. The ADB now expects Philippine inflation to hit 5.9 percent for the year, from its earlier forecast of 4 percent.

The ADB also said higher fertilizer prices may drive rice prices upward.

“Simulations indicate that, in the most severe scenario, farmgate prices in 2026 could rise by…nearly 20 percent in the Philippines,” it said.

Likewise, the International Monetary Fund (IMF) has downgraded its economic growth outlook for the Philippines for this year and the next, due to the slower-than-expected performance in the first quarter, and the Middle East war that has caused a bigger drag than initially anticipated.

In its latest World Economic Outlook (WEO), the IMF said it now expects the Philippine gross domestic product (GDP) to grow by 3.9% this year, slower than the 4.1% projection it made in April. It also downgraded its 2027 forecast to 5.5% from 5.8% previously.

“This reflects a weaker than expected outturn in 2026 Q1 alongside a larger-than-expected effect of the war in the middle East on prices and activity in the Philippines,” an IMF spokesperson said.

Economic growth stood at 2.8% in the first quarter, slower than the 3% seen in the fourth quarter of 2025, and the 5.4% in the first quarter of 2025. It is also the slowest since the 3.8% contraction during the COVID-19 lockdowns in the first quarter of 2021.

“Risks to growth are tilted to the downside while inflation risks are tilted to the upside, reflecting the risk of renewed geopolitical tensions in the Middle East and higher food prices, de-anchoring of inflation expectations, tighter global monetary conditions, and lower remittances,” the IMF said.

“Domestic risks stem from a slower than projected normalization of public investment, extreme climate events, and weaker-than-expected reform momentum,” it added.

Inflation clocked in at 6.4% in June, marking the second straight month of deceleration. It is still faster, however, than the government’s full-year target range of 2% to 4%.