The Philippine economy is expected to grow at a slightly slower pace than previously projected due to global headwinds and tighter fiscal conditions, according to the International Monetary Fund (IMF).
In its 2025 Article IV Consultation, the IMF lowered its GDP forecast to 5.4 percent for this year, down from its 5.5 projection in July. Growth is seen to accelerate to 5.7 percent in 2026, below the earlier 5.9 percent outlook.
“The revision reflects factors related to the first half performance, which was weaker than expected,” IMF mission chief Elif Arbatli Saxegaard said after concluding the consultation mission in Manila.
The IMF cited higher U.S. tariffs on Philippine exports and reduced government spending as key downside pressures, although household consumption is expected to improve. Still, the economy remains broadly resilient, supported by monetary easing and reforms to boost private investment.
Inflation is projected to average 1.6 percent in 2025 and rise to 2.6 percent in 2026, with core inflation settling at 2.5 percent.
Saxegaard said the favorable outlook gives the Bangko Sentral ng Pilipinas room for more accommodative policy.
The IMF urged gradual fiscal consolidation through sustainable revenue sources and warned that deep cuts to priority spending could disproportionately affect vulnerable groups. It also flagged risks in real estate exposure, conglomerate linkages, and fast-growing consumer credit, though systemic risks remain moderate due to strong bank capital and liquidity.
“Enhancing fiscal governance and the rule of law and reducing corruption vulnerabilities are critical for inclusive and sustainable growth,” Saxegaard said.
