The Philippine economy continues to show resilience in the face of external pressures and increased policy uncertainty, according to the International Monetary Fund (IMF) on Friday.
IMF Mission Chief Elif Arbatli Saxegaard stated that the country's economic growth is projected to reach 5.5% in 2025 and rise to 5.8% in 2026.
A delegation led by Saxegaard visited Manila between May 14 to 20 to review recent economic and financial trends and assess the economic outlook for the Philippines.
“The Philippine economy holds significant potential with a sizable demographic dividend and abundant natural resources. The government has been undertaking reforms to reduce infrastructure, health and education gaps, promote foreign direct investment, and diversify the country’s export markets,” Saxegaard stated.
“These reforms should be complemented by strengthening social protection programs, promoting digitalisation, and increasing resilience to climate shocks and natural disasters.”
However, Saxegaard noted that global policy uncertainty and slower growth in major economies could weigh on the Philippines' economic expansion.
The IMF anticipates a rise in consumer spending, driven by declining inflation, a more accommodative monetary policy, and low unemployment levels, Philippine News Agency reports.
Inflation is forecast to ease to 2.2% this year, aligning closely with the lower bound of the government’s target range of 2 to 4%.
Saxegaard indicated that declining inflation would give the Bangko Sentral ng Pilipinas (BSP) room to further lower its policy rates.
“Risks of higher inflation include adverse weather and other supply shocks, including potential disruptions in global supply chains, and risk-off shocks, which could contribute to currency depreciation,” she said.
Meanwhile, the IMF forecasts the Philippines' current account deficit to shrink to 3.4% of GDP in 2025, down from 3.8% in 2024, largely due to softer commodity prices.
Saxegaard also pointed out a reduction in the country’s fiscal deficit as a positive development.
“The fiscal deficit declined from 6.1% of GDP in 2023 to 5.7% in 2024, largely in line with the government’s latest fiscal program, and the overall fiscal stance is expected to be broadly neutral in 2025,” she said.
Saxegaard added that the medium-term fiscal consolidation strategy remains suitable and should be backed by a sustainable approach to increasing tax revenues and carrying out expenditure reforms.
Furthermore, the IMF also observed that systemic financial risks are contained, credit growth is robust, and the banking sector is well-capitalised with strong liquidity reserves.
“Important progress has been made in addressing Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) issues, as exemplified by the Philippines’ welcome exit from the Financial Action Task Force (FATF) grey list in February 2025. The current momentum should be maintained,” Saxegaard continued.