The Philippine economy is projected to grow more than 5 percent this year and next, according to the International Monetary Fund (IMF).
“The Philippine economy remains resilient despite external challenges. While the announced US tariffs are expected to have a limited direct impact, the higher global policy uncertainty and lower growth in major economies will weigh on growth, which is projected at 5.5 percent in 2025 and 5.8 percent next year,” IMF Mission Chief Elif Arbatli-Saxegaard said.
“Consumption is expected to be supported by monetary policy easing amid lower inflation, and low unemployment; however, private investment is projected to remain subdued.
Risks are tilted to the downside, driven mainly by external factors but also by the weaker-than-expected outturn in the first quarter,” she added.
The economy expanded by 5.4 percent in the first three months of the year.
The government targets 6-8 percent GDP growth this year and 2026.
Meanwhile, the IMF said the current account deficit is projected to narrow from 3.8 percent of GDP in 2024 to 3.4 percent of GDP in 2025, supported by weaker commodity prices.
Reserves have declined since peaking in September 2024 but remained adequate at $105.3 billion as of April.
“The Bangko Sentral ng Pilipinas (BSP) has room to continue to reduce the policy rate and firmly move to a neutral stance. Headline inflation fell to 1.4 percent (y/y) in April 2025, largely driven by the earlier tightening cycle and lower food prices supported by the reduction in rice tariffs last year and other administrative measures by the government, while core inflation declined to 2.2 percent,” Arbatli-Saxegaard said.
“With inflation expectations well-anchored, inflation is projected to stay near the lower end of the target band at 2.2 percent in 2025 and risks are broadly balanced. 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 added.
Still, the IMF warned risks of weaker global demand prospects and excess capacity in certain sectors could pose deflationary risks, including through lower commodity prices.
“Ongoing reforms to develop the Philippines’ fixed income and money markets, including the launch of the interest rate swap market, enhanced Primary Dealer System, and consolidation of bond issuance into fewer but benchmark-sized instruments are welcome and will help enhance monetary policy transmission,” it added.