By the staff
The International Monetary Fund lowered its growth outlook for the Philippines on Monday, warning that global trade tensions, geopolitical uncertainty, and domestic climate shocks could slow economic expansion despite Manila’s policy reforms.
Following its Article IV Consultation concluded last month, the IMF now expects GDP growth of 5.1% in 2025 and 5.6% in 2026, down from prior forecasts of 5.4% and 5.7%. The report cited “increasing tariffs [that] weigh on exports and investments.”
The Philippine economy expanded 5.7% in 2024, fueled by strong public consumption and investment, but growth slowed to 5.4% in the first half of 2025 and 4% in the third quarter as weaker fixed capital formation, delayed flood control projects, and soft private spending weighed on output.
“The risks to the near-term growth outlook are tilted to the downside,” the IMF said, pointing to “prolonged global trade policy uncertainty, geopolitical tensions, and disruptive financial market corrections,” as well as domestic challenges from “more frequent and intense climate shocks.” It added that faster implementation of structural and governance reforms could “support investor confidence and raise fiscal multipliers and potential growth.”
On fiscal policy, the IMF welcomed Manila’s medium-term consolidation plan, which it said would “help reinforce fiscal space and external balance and support a growth-friendly strategy.”
The Fund urged authorities to implement “concrete and durable tax and expenditure measures” and improve public investment management. “A number of directors suggested embedding fiscal targets in a formal fiscal rule,” the report said.
Inflation is projected at 1.7% in 2025 and 2.8% in 2026, with first-half 2025 data showing a 1.6% rise, below the BSP’s 2-4% target.
