Manila: The conflict in the Middle East is expected to have significant repercussions on both global and Philippine economic growth prospects, as highlighted in a recent report from the International Monetary Fund (IMF).

According to Philippines News Agency, the IMF's World Economic Outlook (WEO) projects a 4.1 percent growth rate for the Philippine economy, a downward revision from the 5.6 percent forecast made earlier this year in January. The reduced outlook is attributed to several factors including lower-than-expected growth in late 2025, continuing impacts from a flood-control corruption scandal, and the ongoing war in the Middle East.

The IMF remains optimistic about the long-term growth trajectory for the Philippines, projecting a rebound to 5.8 percent in 2027. Inflation is anticipated to reach 4.3 percent this year, with a projected decrease to 3.2 percent by 2027. The IMF spokesperson noted that risks to growth are predominantly negative, while inflation risks remain positive, driven by the potential for an extended conflict in the Middle East, escalating geopolitical tensions, and increased uncertainty in trade policies.

The global economy is also expected to be impacted by the Middle East conflict. The IMF forecasts a moderate slowdown in global growth, assuming the war is relatively short-lived. Global economic growth is predicted to be 3.1 percent in 2026 and 3.2 percent in 2027, a slight decline from the 3.4 percent estimated for 2025. Notably, pre-conflict growth forecasts have been revised downward by 0.2 percentage points, with lower-income, commodity-importing economies facing the greatest challenges due to rising energy and food prices and currency depreciation.