Manila: The Philippine economy is expected to remain resilient despite the slower performance in the first half of the year amid external headwinds, the International Monetary Fund (IMF) said.
According to Philippines News Agency, in a briefing at the Bangko Sentral ng Pilipinas office in Manila, IMF Mission Chief Eli Arbatli Saxegaard stated that the Philippine economy is projected to grow by 5.4 percent this year and 5.7 percent in 2026. An IMF team led by Saxegaard held meetings in Manila from September 18 to October 1 for the 2025 Article IV Consultation. The latest projections were lower than the 5.5 percent for 2025 and 5.9 percent for 2026 earlier forecast by the IMF, reflecting weaker than expected first-half performance.
Saxegaard noted that higher tariffs imposed on Philippine exports to the US would impact exports and investment. Despite these lower projections, the Philippine economy has achieved successful disinflation, maintaining resilience despite negative external spillovers. Economic growth is anticipated to be supported by monetary easing and recent legislative measures to promote private investment.
The IMF highlighted the Philippine economy’s significant potential, driven by a sizable demographic dividend and abundant natural resources. Recent reforms aimed at reducing infrastructure gaps and promoting foreign direct investment are viewed positively, though effective implementation is crucial for realizing their benefits. The IMF also emphasized the importance of negotiating and implementing deep trade agreements to enhance global value chain integration and resilience, which will require steps to lower non-tariff barriers.
Improving fiscal governance, rule of law, and reducing corruption vulnerabilities are critical for inclusive and sustainable growth. Saxegaard mentioned that these reforms should be complemented by strengthening social protection programs, promoting digitalization, and increasing resilience to climate shocks and natural disasters. The IMF suggests that the government should continue implementing gradual fiscal consolidation and consider concrete and durable tax measures, such as better use of data analytics and compliance risk management to support revenue mobilization, pursuing excise taxes on unhealthy foods and sugar beverages, monitoring tax incentives costs, and enhancing the efficiency of the value-added tax.
Saxegaard identified risks to the growth outlook, including prolonged global trade policy uncertainty, geopolitical tensions, and disruptive financial market conditions. Locally, more frequent and intense climate shocks could cause economic losses. Accelerated implementation of structural and governance reforms would support investor confidence, fiscal multiplier, and raise potential growth. Inflation is projected to average 1.5 percent this year.
