The International Monetary Fund (IMF) executive board has expressed support for the Bangko Sentral ng Pilipinas (BSP) monetary easing cycle, saying the accommodative stance is necessary to bolster the economy amid slowing growth and well-anchored inflation expectations.
The IMF’s statement followed the conclusion of its 2025 Article IV consultation with the Philippines on Nov. 24, 2025.
IMF executive directors agreed that monetary policy should remain accommodative due to elevated downside risks to growth. They commended the authorities’ data-dependent approach and urged the continued use of the exchange rate as a shock absorber, with interventions limited to addressing disorderly market conditions temporarily. They also encouraged efforts to deepen capital markets and enhance monetary policy transmission.
The IMF noted that real gross domestic product (GDP) growth moderated to 5.4 percent in the first half of 2025 and slowed sharply to 4.0 percent year-on-year in the third quarter. The slowdown in the third quarter was attributed to weaker-than-anticipated growth in gross fixed capital formation and private consumption.
The IMF projects GDP growth to slow to 5.1 percent in 2025 as increasing tariffs weigh on exports and investment, before moderately picking up to 5.6 percent in 2026. This represents a downward revision from previous forecasts. Potential growth is estimated to be around 6.0 percent over the medium term.
Inflation has declined due to a restrictive monetary policy stance and government efforts to reduce food prices. Headline and core inflation averaged 1.7 percent and 2.4 percent (year-on-year) in 2025 as of October. Inflation is projected to average 1.7 percent in 2025 then pick up to 2.8 percent in 2026 as negative base effects recede.
The IMF directors commended the authorities’ well-calibrated macroeconomic policies and reforms but cautioned that the balance of risks to the growth outlook is tilted to the downside, citing uncertainty from global trade policies, corruption allegations related to flood control projects, and extreme climate events. They underscored the need to prioritize governance reforms, greater private investment, economic diversification, and resilience to climate shocks to sustain inclusive growth.
The board welcomed the plan for gradual fiscal consolidation over the medium term to reinforce fiscal space and external balance, encouraging concrete and durable tax and expenditure measures. They also suggested embedding fiscal targets in a formal fiscal rule.
While overall systemic financial risks remain moderate, the directors encouraged close monitoring of vulnerabilities in the real estate sector, interconnectedness between banks and complex conglomerate structures, and fast-growing consumer credit. They advised enhancing the macroprudential policy framework and welcomed the Philippines’ successful exit from the Financial Action Task Force grey list.
The IMF directors encouraged building on recent reforms to improve the business environment by ensuring effective implementation. They recommended reducing infrastructure and energy gaps, promoting foreign direct investment and productivity, and further lowering non-tariff barriers to enhance global value chain integration.
They also cited strengthening governance and the rule of law, reducing corruption vulnerabilities, and enhancing human capital and workforce skills. Given the country’s vulnerability, they welcomed efforts to increase resilience to climate shocks and integrate climate risks into policy frameworks.
