By citing factors like weaker-than-expected growth in the first half, the American tariffs on Philippine goods and geopolitical conflicts, the International Monetary Fund (IMF) sees the economy Philippines growing only 5.4% this year and 5.7% next year, according to a news report by BusinessWorld.
To put things in perspective, posted below is an excerpt from the BusinessWorld news report. Some parts in boldface…
PHILIPPINE ECONOMIC GROWTH is expected to moderate this year and in 2026 amid ongoing trade uncertainties and geopolitical tensions across the globe, the International Monetary Fund (IMF) said.
The IMF trimmed its Philippine growth forecast to 5.4% for this year, slightly lower than its 5.5% projection in July.
If realized, gross domestic product (GDP) growth will be at the low end of the National Government’s 5.5-6.5% target band this year.
For 2026, the IMF also cut its growth forecast to 5.7% from 5.9% previously. However, this is below the government’s 6-7% target for next year.
The IMF said the economy is expected to remain resilient, but downside risks warrant “close attention.”
“Risks to the growth outlook are tilted to the downside. The main external risks stem from prolonged global trade policy uncertainty, geopolitical tensions, and disruptive financial market corrections,” IMF Mission Head Elif Arbatli Saxegaard said at a briefing after the conclusion of the 2025 Article IV Consultation with the Philippines on Wednesday.
“On the domestic front, more frequent and intense climate shocks would cause notable macroeconomic losses. On the upside, accelerated implementation of structural and governance reforms would support investor confidence and the fiscal multiplier and raise potential growth. Risks around inflation are broadly balanced.”
Ms. Saxegaard said the growth outlook was revised to reflect the weaker-than-expected growth in the first half. For the first half, GDP growth averaged 5.4%, slower than the 6.2% a year ago.
Ms. Saxegaard said growth will be affected by the higher tariffs imposed by the US on Philippine goods. The US began imposing a 19% tariff on goods from the Philippines on Aug. 7
“It will weigh on exports and investment,” she said.
She also noted growth will be “supported by monetary easing and recent legislative measures to promote private investment.”
Meanwhile, the IMF sees inflation averaging 1.6% this year, before picking up to 2.6% next year.
“The pickup in inflation is expected to be driven by (the) food and transport crisis,” Ms. Saxegaard said. “And that reflects essentially the decline in negative base effects that have been dragging down inflation this year. So, as those base effects recede, we expect a pickup.”
She said core inflation is expected to “remain muted” at 2.5% in 2026.
“The BSP (Bangko Sentral ng Pilipinas) has room for a slightly more accommodative stance to help bring inflation back to the target faster and reduce economic slack amid elevated downside risks to growth,” Ms. Saxegaard said. “Policy will need to remain data dependent amidst prevailing uncertainties around the output gap and the neutral rate, and two-sided risks to inflation.”
On Aug. 28, the central bank slashed its key interest rate by 25 basis points (bps) for a third consecutive time to 5%. It has cut the benchmark by a total of 150 bps since August last year.
CORRUPTION – Asked about recent corruption scandals involving some government projects, Ms. Saxegaard said the IMF will continue to monitor the developments.
“It’s not yet clear whether and how these allegations will impact investor and private sector confidence, as well as their perceptions and behavior,” she said.
The IMF welcomed recent reforms to reduce infrastructure gaps and promote foreign direct investment, but effective implementation is key.
“Enhancing fiscal governance and the rule of law and reducing corruption vulnerabilities are critical for inclusive and sustainable growth,” Ms. Saxegaard said.
The IMF urged the Philippine government to continue implementing gradual fiscal consolidation “to replenish fiscal buffers and support external balance.”
Let me end this post by asking you readers: What is your reaction to this development? Do you think the IMF’s prediction of weaker economic growth will turn out true? Do you think the flood control projects scandal and government corruption investigation are turning away foreign investors?
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 