The International Monetary Fund (IMF) acknowledged that the Philippine government’s macroeconomic policies and reforms support economic growth, but lowered its growth forecasts for 2025 and 2026 due to external headwinds.
Following the conclusion of its Article IV Consultation with the Philippines on Nov. 24, the IMF said in a report released Monday that it now expects GDP growth of 5.1 percent in 2025 and 5.6 percent in 2026, down from earlier projections of 5.4 percent and 5.7 percent, respectively. The downgrade reflects the impact of higher tariffs on exports and investment.
“The risks to the near-term growth outlook are tilted to the downside,” it said, citing external risks such as “prolonged global trade policy uncertainty, geopolitical tensions, and disruptive financial market corrections.”
It also noted domestic factors such as macroeconomic losses due to “more frequent and intense climate shocks.”
“On the upside, accelerated implementation of structural and governance reforms would support investor confidence and raise fiscal multipliers and potential growth,” it said.
The IMF noted that the economy grew by 5.7 percent in 2024, supported by strong public consumption and investment, but growth slowed to 5.4 percent in the first half of 2025 and further decelerated to 4 percent in the third quarter due to weaker investment and private consumption.
Despite the forecast cut, the IMF said potential growth remains around 6 percent over the medium term, though near-term risks are tilted to the downside amid global trade uncertainty, geopolitical tensions, and climate-related shocks. On the upside, faster implementation of structural and governance reforms could boost investor confidence and growth.
The IMF said the government’s medium-term fiscal consolidation plan would help strengthen fiscal space and external balances, while inflation is projected to average 1.7 percent this year and 2.8 percent next year, remaining within the Bangko Sentral ng Pilipinas’ target range.
It added that monetary policy should remain accommodative given downside risks to growth and anchored inflation expectations, while allowing the exchange rate to act as a shock absorber, with interventions limited to addressing disorderly market conditions.
ANADOLU PHOTO