By Tracy Cabrera
MANILA — Despite the peso hitting a record low, the Philippines can still reach this year’s growth target, according to the Asian Development Bank (ADB).
Philippine Institute for Development Studies senior fellow John Paolo Rivera said the peso remained weak mainly due to external factors, particularly “higher oil prices amid renewed Middle East tensions, elevated global yields, and expectations of tighter monetary policy by the United States.”
“For an oil-importing economy like the Philippines, higher crude prices also increase demand for dollars and add to inflation concerns,” Rivera noted.
“I expect the peso to remain volatile and potentially test further lows in the near term if these pressures persist,” he added.
A trader said P63 to $1 was now “within striking distance, but I would not view it as inevitable.”
“At these levels, the market will increasingly test the BSP (Bangko Sentral ng Pilipinas)’s tolerance for volatility, and the recent rate hike gives it more room to lean against disorderly moves,” the trader said.
“The key question is no longer whether P63 can be touched, but whether the peso can stay there.”
Meanwhile, ADB President Masato Kanda said the government’s growth target would require a significant rebound in public investment following slowdowns caused by a massive flood control project scandal.
“It is challenging, but we think reaching the 3.8 percent forecast for 2026 is possible, attainable,” Kanda told the media during a press briefing.
Still, he stressed that this would hinge on a strong second-half recovery in project execution and household consumption.
The country’s gross domestic product (GDP) growth slowed to 2.3 percent in the second quarter from 2.8 percent in the first three months of 2026, mainly due to the fallout from the war in the Middle East and the lingering effects of last year’s corruption mess.
“The second quarter growth largely reflected the delayed public investment due to tighter oversight, as well as the muted household consumption driven by high inflation,” Kanda pointed out.
“So, to meet the target, we have to see a significant acceleration in public investment execution,” he asserted.
The ADB, in its July Asian Development Outlook, lowered its Philippine growth projections for the current year and the next, citing delayed investments, softer private consumption, and the energy shock from the conflict between the US and Iran.
The Manila-based multilateral lender now expects the Philippines to grow by 3.8 percent this year, down from its previous 4.4 percent projection.
It expects growth to pick up to 5.3 percent next year, also lower than its previous forecast of 5.5 percent.
Kanda warned that external crises could outpace the ability of countries to cope and reverse hard-won development gains, with the poor and most vulnerable hit the hardest.
“Traditional approaches are no longer sufficient to achieve our goals. The Philippine government must continue to make markets investable, while the private sector should finance expertise and innovation upscaling,” Kanda concluded.
IA/XF
