THE PHILIPPINE ECONOMY may grow slow until next year as global uncertainty and local corruption scandals continue to drag on growth, the International Monetary Fund (IMF) said.
In its latest World Economic Outlook (WEO) released on Monday, the IMF said it expects the Philippines’ gross domestic product (GDP) to grow by 5.6% this year, within the government’s target of 5%-6%.
This is the same estimate given following the Article IV Consultation with the country last December, but it is slightly lower than its estimate of 5.7% in the previous WEO.
At the same time, the IMF cut its GDP growth forecast for 2027 to 5.8% from 6% in October. This also falls below the government’s target of 5.5%-6.5%.
“The downward revision of GDP growth projections for 2026 and 2027 reflects the impact from the downward revision to the IMF’s growth forecast for 2025 – from 5.4% to 5.1% – and the slower pace of capital accumulation,” an IMF spokesperson said in an email.
In 2025, the multinational lender expected Philippine GDP to grow by 5.1%, unchanged from the December forecast. However, this is below its 5.4% forecast given in October.
This happened after a flood of corruption that led to slow economic growth and government spending. In the third quarter, GDP grew by 4% – the weakest growth in four years. This resulted in annual GDP growth of 5%.
The IMF said the weather shock in the last half of the year also contributed to the economic downturn.
“The 2025 recession revision shows a larger than expected decline in Q3 amid recent corruption allegations and weather shocks impacting the economy in the second half of the year,” the statement said.
In 2025, the Philippines experienced 23 tropical storms, affecting millions of Filipinos and leaving billions of pesos in damages across the country, according to data from the weather office.
The IMF previously said that climate disruption reduced the country’s GDP by 0.2%-0.3% per year and increased inflation by up to 0.6% per year.
The multilateral lender said continued uncertainty about tighter trade barriers, political tensions, and disruptions to financial market reforms could dampen the country’s economic growth.
“On the one hand, the rapid implementation of structural and administrative reforms can increase investment and FDI (foreign direct investment), increase capital multipliers and increase potential growth,” it added.
Meanwhile, the IMF forecasts 6% GDP growth in the Philippines in 2028, at the lower end of the government’s target of 6%-7%.
“Economic growth will be driven by strong consumption and higher investment, supported by the easing of monetary policy and the authorities’ recent policy initiatives to support private investment,” the IMF said.
The Bangko Sentral ng Pilipinas (BSP) has been on an easy path since August 2024, as it delivered a total of 200 basis points (bps) in cuts.
In October and December last year, it cut the key policy rate by 25 bps each to boost domestic demand amid subdued consumer and investor sentiment due to the flood control crisis.
The benchmark interest rate now stands at a three-year low of 4.5%, which the central bank has said is close to the ideal level, signaling the end of its current tapering cycle.
BSP Governor Eli M. Remolona, Jr. left the door open to another 25-bp cut in their Feb update. 19 but said further expansion may not be possible given current economic data.
However, he noted that weaker-than-expected growth may prompt them to cut rates twice this year to help stimulate the economy. – Katherine K. Chan
