PH seen to miss economic growth target for 4th straight year

The International Monetary Fund (IMF) has downgraded its economic growth outlook for the Philippines for 2026, dragged by the ongoing conflict between in the Middle East and the continued impact of the flood control corruption scandal.

In its latest World Economic Outlook (WEO), the IMF said it now expects the Philippine economy to grow by 4.1% this year, slower than the 5.6% outlook in January.

Should this be realized, this would be the fourth straight year that the Philippines would miss its economic growth target, falling short of the already downgraded range of 5.0% to 6.0%.

“Growth is revised downward by 1.5 percentage points for 2026, relative to January, with the war shock compounding the negative base effects from a weaker-than-expected 2025 outturn related to a sharp decline in public investment and confidence,” the IMF’s WEO read.

“Risks to growth are tilted to the downside while inflation risks are tilted to the upside, reflecting the risk of a prolonged war in the Middle East, further escalation of geopolitical tensions, and higher trade policy uncertainty,” the IMF added.

The IMF expects inflation to average 4.3% this year, above the Bangko Sentral ng Pilipinas’ (BSP) target range of 2.0% to 4.0%. Inflation averaged 2.8% in the first quarter of the month, after clocking in at 4.1% in March.

This comes as global oil prices continue to be volatile amid the ongoing conflict in the Middle East.

Over the weekend, United States President Donald Trump said the US Navy would immediately blockade the Strait of Hormuz after talks with Tehran failed to reach a deal to end the war.

Prior to this, Trump agreed to a two-week ceasefire with Iran, subject to Iran’s agreement to pause its blockade of oil and gas supplies through the strait.

The ceasefire came less than two hours before the deadline for Iran to reopen the Strait of Hormuz on 8 p.m. April 7, eastern time (9 a.m. on April 8, Philippine time), or have its power infrastructure and bridges targeted.

The Philippines also continues to feel the impact of the flood control corruption scandal on public investment and confidence.

Courts continue to look into alleged irregularities in public works spending, after President Ferdinand 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.”

Such concerns impacted both government and consumer spending, which brought gross domestic product (GDP) growth down to 3.0% in the fourth quarter of 2025, the weakest quarterly performance since the 3.8% contraction recorded in the first quarter of 2021 at the height of the COVID-19 pandemic lockdowns.

This brought the full-year 2025 growth to 4.4%, lower than the administration’s already downgraded goal of 5.5% to 6.5%, marking the third straight year that the country has fallen short of achieving its target. — JMA, GMA News