The International Monetary Fund (IMF) said the Philippine economy would expand by over 6% in 2025 and 5.8% this year as the nation successfully navigated multiple external headwinds.
In a briefing at the Bangko Sentral ng Pilipinas office in Manila on the IMF Mission, chief Eli Arbatli Saxegaard said the Philippines would continue its status as one of the best-performing economies in the Asian region.
Saxegaard said the Philippine economy will accelerate to 6.1% next year. "This pick-up in growth will be supported by more accommodative financial conditions and higher investment," she added.
The latest projection, however, was lower than the 6% and 6.2% previous forecast for 2024 and 2025.
"The downward revision from our July forecast reflects our view that private consumption will grow slightly with less momentum. So I would like to highlight that the downgrade is very small, 0.2, and reflects that the first half (of the year) private consumption growth was lower than we had anticipated. And this might partly be driven by the high food prices," Saxegaard said.
Despite the revision, Saxegaard said the Philippines remains one of the region's highest-growing economies.
"I would also like to highlight that the growth forecast for the Philippines remains one of the highest in the region. Its 6.1% growth for 2025 is a very respectable growth rate… So it's a minimal adjustment reflecting the outturns the first half," she said.
Downside risks to the country's growth outlook include a slowdown in major economies that could disrupt trade and financial flows, commodity price volatility and supply shocks, and an escalation of geopolitical tensions or regional conflicts.
On the other hand, an easing of global financial conditions or faster-than-anticipated private investment linked to public-private partnerships and larger foreign direct investment inflows could stimulate higher growth.
The IMF believes the Philippine economy holds significant potential due to its abundant natural resources, untapped blue economy, and sizable demographic dividend.
Saxegaard, however, said that unlocking the medium-term growth potential will depend on structural reforms and strengthened social protection programs.
She said priority areas include upgrading infrastructure, significant investments in healthcare and education, addressing land fragmentation and low productivity in the agricultural sector, and enhancing governance.
Meanwhile, inflation is projected to settle within the government's target for 2024 and 2025.
"We believe that the decisive monetary tightening and other measures have helped mitigate inflationary pressures in the Philippines; recent tariff cuts on imported rice and other non-monetary measures helped reduce food prices and should further reduce headline inflation by the year-end," Saxegaard said.
"For this year, we expect inflation to average 3.3 percent, and for next year, 3 percent. That would be supported by lower food and core inflation remaining well within the target."
Saxegaard said that with inflation returning toward the target, a continued gradual reduction of the policy rate is appropriate.
For his part, IMF Resident Representative to the Philippines Ragnar Gudmundsson said there are both upside and downside risks to inflation.
"Inflation could perform even better than anticipated. If, for instance, food prices continue coming down, especially rice prices, there would be a positive development that could support monetary policy easing," he said.
"However, we're also aware that inflation has upside risks. You know, commodity prices like oil prices can fluctuate rapidly and widely. These are dependent on developments abroad. And this is why the data-dependent approach is critical."
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