While the government of the Philippines is delighted over the nation’s new status as an upper-middle income economy (click here and here) believing that a bright economic future is approaching, the International Monetary Fund (IMF) sees the national economy growing at a weaker pace until 2027, according to a BusinessWorld news report.
To put things in perspective, posted below is an excerpt from the BusinessWorld news report. Some parts in boldface…
THE PHILIPPINE ECONOMY could post its weakest growth this year since the pandemic, as the Middle East war drives up prices and dampens economic activity, the International Monetary Fund (IMF) said.
In its latest World Economic Outlook (WEO) released on Wednesday, the IMF trimmed its 2026 gross domestic product (GDP) growth forecast for the Philippines to 3.9% from 4.1% previously. This is still within the government’s 3.5%-4.5% target.
“This reflects a weaker-than-expected outturn in the first quarter of 2026 (2.8%) alongside a larger-than-expected effect of the war in the Middle East on prices and activity in the Philippines,” an IMF spokesperson said in an e-mail.
Oil price shocks and the lingering impact of the flood control fallout dragged first-quarter Philippine GDP growth below market and government expectations at 2.8%.
Since the United States and Israel first launched attacks on Iran on Feb. 28, spiraling oil prices fed into the costs of other key commodities and squeezed consumers’ pockets.
If the IMF’s projection holds true, the country’s full-year expansion will be weaker than the 4.4% recorded in 2025, when a massive flood control corruption scandal dampened public spending, investments, and sentiment.
It would also mark the economy’s worst performance since the 9.5% contraction during the COVID-19 pandemic in 2020.
Excluding the pandemic, it would match the 3.9% expansion in 2011 and would be the worst in 17 years or since the 1.4% in 2009.
The multilateral lender’s Philippine growth estimate is below its projection for ASEAN-5, which it kept at 4.1% for this year. ASEAN-5 is composed of Indonesia, Malaysia, the Philippines, Singapore, and Thailand.
The Philippines is expected to lag Indonesia (5%) and Malaysia (4.7%) but outpace Thailand (1.9%) this year.
At the same time, the IMF trimmed the Philippine growth projection for 2027 to 5.5% from 5.8% previously, on the back of base effects and a potential improvement in sentiment.
This is within the government’s 5%-6% target for the year. It is also above the IMF’s 2027 growth projection of 4.3% for ASEAN-5.
“The rebound in 2027 is driven mainly by favorable base effects, alongside a gradual pickup in investment as confidence improves and supply-side effects related to the war ease,” the IMF spokesperson said.
According to the multilateral lender, risks to domestic growth may come from extreme weather disturbances, as well as a slower-than-projected normalization of public investments and reform momentum.
Let me end this post by asking you readers: What is your reaction to this recent development? Do you find the IMF’s analysis for the Philippines believable? Do you think the economy of the Philippines will grow below 5% per year until the end of 2028?
You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.
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