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MANILA, Philippines — The Worldwide Financial Fund stated the Philippine economic system stays resilient regardless of exterior challenges. Nevertheless, the IMF however flagged slower progress prospects within the close to time period as a result of subdued international demand and lingering uncertainties.
In a press release on Friday following a weeklong mission in Manila, IMF mission chief Elif Arbatli Saxegaard stated that the Philippines is essentially shielded from the direct influence of newly introduced US tariffs. Nonetheless, broader international headwinds are anticipated to weigh on the nation’s financial enlargement. These embody slower progress in main economies and heightened coverage uncertainty.
“Nevertheless, progress is projected at 5.5 p.c in 2025, barely decrease than earlier authorities estimates, and 5.8 p.c in 2026,” stated Saxegaard. She led the session which ran from Might 14 to twenty.
She added that home consumption is predicted to learn from easing financial coverage. And but, decrease inflation and traditionally low unemployment, personal funding stays subdued, and dangers to the financial outlook are skewed to the draw back.
IMF sees balanced dangers
The IMF official additionally stated that the Bangko Sentral ng Pilipinas (BSP) has room to additional lower its benchmark rate of interest. That is so on condition that inflation has slowed significantly, dropping to 1.4 p.c in April 2025. That’s due to final yr’s rice tariff cuts and authorities administrative measures.
READ: Bangko Sentral ng Pilipinas sees no less than two extra charge cuts in 2025
Saxegaard added that core inflation was additionally subdued at 2.2 p.c. This displays easing value pressures throughout a broader vary of products and companies. It reinforces expectations that general inflation will stay inside goal for the remainder of the yr.
With inflation expectations well-anchored, she stated inflation was projected to remain close to the decrease finish of the goal band at 2.2 p.c in 2025. She additionally stated that dangers are broadly balanced.
“Dangers of upper inflation embody antagonistic climate and different provide shocks, together with potential disruptions in international provide chains, and risk-off shocks which might contribute to forex depreciation,” she stated.
Regardless of decrease inflation, the IMF official flagged potential dangers that might push costs larger. These embody international provide disruptions, weather-related shocks, and a weakening peso.
Weaker demand
On the identical time, she stated softer international demand and decrease commodity costs might convey deflationary pressures.
On the exterior entrance, she famous that the present account deficit is projected to slender to three.4 p.c of gross home product (GDP) in 2025. This comes from 3.8 p.c in 2024, aided by falling commodity costs.
Worldwide reserves, although down from a September 2024 peak, stay ample at $105.3 billion as of April, in line with Saxegaard.
On the plus facet, she stated that fiscal efficiency has improved.
The deficit shrank from 6.1 p.c of GDP in 2023 to five.7 p.c final yr. It’s anticipated to stay broadly secure in 2025.
The IMF additionally careworn that medium-term fiscal consolidation stays vital. It urged the federal government to pursue tax reforms to spice up revenues.
“Tax reforms might prioritize elevating excise taxes, enhancing (value-added taxes) effectivity, enhancing tax administration, and guaranteeing efficient management of tax incentives,” Saxegaard stated. She added that capacity-building on the native authorities stage is required as extra assets are devolved.
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She stated that the monetary system additionally stays secure, with robust capital and liquidity buffers. Nevertheless, the IMF warned of rising dangers from banks’ publicity to actual property and rising client credit score.
