Recently the International Monetary Fund (IMF) stated that it expects the economic growth of the Philippines to get stronger in 2026 but it issue a warning that external developments could prevent it from happening, according to a BusinessWorld news report.
To put things in perspective, posted below is an excerpt from the news report of BusinessWorld Some parts in boldface…
THE PHILIPPINE ECONOMY will continue to accelerate from this year to 2026 as domestic demand remains robust, the International Monetary Fund (IMF) said, but warned risks are tilted to the downside due to possible external shocks.
At the same time, Finance Secretary Ralph G. Recto said that the Philippines likely failed to hit its 6-6.5% growth goal for 2024, amid typhoons.
“If it hits 6% in the fourth quarter, I’ll be happy with that. I don’t think it will hit 6% for 2024, but I think it will surpass 6% in 2025,” Mr. Recto told reporters on Jan. 16.
For the first nine months of 2024, Philippine growth averaged 5.8%, the same as the IMF’s projection for the full year. Preliminary fourth-quarter and full-year gross domestic product (GDP) data will be released on Jan. 30.
In its latest World Economic Outlook update, the IMF kept its GDP forecasts for the Philippines at 6.1% this year and 6.3% for 2026, the same as its projections in October.
These would fall within the government’s 6-8% GDP target for 2025 and 2026.
“Growth for 2025-2026 is projected to be primarily driven by domestic demand, namely consumption and investment,” an IMF spokesperson said in an e-mail.
“Consumption growth will be supported by lower food prices and gradual monetary policy easing,” it added.
Latest data from the Philippine Statistics Authority showed household consumption, which accounts for over three-fourths of the economy, jumped by 5.1% in the third quarter from 4.7% a quarter ago.
“Investment growth is expected to pick up on the back of a sustained public investment push, gradually declining borrowing costs and acceleration in the implementation of public-private partnership projects and foreign direct investments (FDI), following recent legislative reforms,” the IMF said.
Gross capital formation, the investment component of the economy, expanded by 13.1% in the third quarter, a turnaround from the 0.3% dip a year ago.
However, the IMF said that the balance of risks to the growth outlook is tilted to the downside, citing external risks.
“Some of the main downside risks include recurrent commodity price volatility, and new supply shocks, which may necessitate tighter monetary policy to anchor inflation expectations,” it said.
The IMF also cited shocks such as geopolitical tensions which could disrupt trade and other financial flows.
“Higher for longer policy rates in advanced economies (could cause) capital outflows, and tighter financial conditions,” it added.
The multilateral institution also cited climate shocks and extreme weather events which would lead to economic losses.
“There are also upside risks to the outlook, including from higher-than-expected growth in private investment through public-private partnerships, higher inward FDI following a faster-than-expected global recovery, or stronger reform momentum,” it added.
INFLATION – Meanwhile, the IMF said it expects inflation to remain within the central bank’s 2-4% target range in the near to medium term. It projects headline inflation to average 2.8% this year and 3% in 2026.
“However, risks are tilted to the upside, as rising geopolitical tensions, extreme climate events, and recurrent commodity price volatility continue to pose upside risks to inflation,” it said.
Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the IMF is correct with its current analysis of the details and economic forecast for the Philippines? Do you think the national government should focus more on attracting new foreign investors and bringing inflation down to build up the economic momentum?
You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.
+++++
Thank you for reading. If you find this article engaging, please click the like button below, share this article to others and also please consider making a donation to support my publishing. If you are looking for a copywriter to create content for your special project or business, check out my services and my portfolio. Feel free to contact me with a private message. Also please feel free to visit my Facebook page Author Carlo Carrasco and follow me on Twitter at @HavenorFantasy as well as on Tumblr at https://carlocarrasco.tumblr.com/ and on Instagram athttps://www.instagram.com/authorcarlocarrasco
Author Carlo Carrasco 