IMF downgrades PH economic growth outlook for 2025, 2026 anew

The International Monetary Fund (IMF) has downgraded its Philippines economic growth outlook anew following the weaker-than-expected performance in the third quarter, with the risks to the outlook tilted to the downside amid corruption concerns and global trade policies.

Following the 2025 Article IV consultation with the Philippines, the IMF now expects economic growth to average 5.1% this year, down from the 5.4% projection in made in October, and farther from the lower end of the government’s already trimmed down target range of 5.5% to 6.5% for 2025.

The IMF also downgraded its 2026 outlook to 5.6% from 5.7% previously.

“Growth is expected to slow to 5.1% in 2025 as increasing tariffs weigh on exports and investment, before picking up moderately to 5.6% in 2026, a downward revision relative to previous forecasts due to sharper-than-expected slowdown in 2025Q3,” the IMF said in a statement.

Economic expansion averaged 5% in the first nine months of 2025, after third-quarter GDP slowed to 4.0%—the weakest in four years, and the lowest since the 3.8% recorded in the first quarter of 2021 when strict COVID-19 lockdowns were in place.

“The risks to the near-term growth outlook are tilted to the downside. The main external risks stem from prolonged global trade policy uncertainty, geopolitical tensions, and disruptive financial market corrections,” the IMF said.

Directors concurred that the balance of risks to the growth outlook is tilted to the downside amid uncertainty from global trade policies, corruption allegations related to flood control projects, and extreme climate events,” it added.

Philippine lawmakers are now looking into alleged irregularities in public works spending, after President Ferdinand “Bongbong” Marcos Jr. in August disclosed that 20% of the total P545-billion budget for flood control projects went to only 15 contractors, which he described as a “disturbing assessment.”

This has hit government spending on public works and dampened consumer and investor sentiment, leading Department of Economy, Planning, and Development (DepDev) Secretary Arsenio Balisacan to concede that the country is unlikely to achieve its economic growth target for the third straight year in 2025.

“Directors underscored the need to continue prioritizing governance reforms, greater private investment, economic diversification, and resilience to climate shocks to sustain inclusive growth,” the IMF said.

The IMF expects inflation to average 1.7% this year, below the government’s 2.0% to 4.0% target range, before accelerating to 2.8% in 2026. Core inflation is seen to settle at 2.4% this year, and at 2.6% in 2026. —AOL, GMA Integrated News