IMF projects faster PH growth in 2024-2025

The International Monetary Fund (IMF) anticipates a moderate acceleration in the Philippines’ economic growth for 2024 and 2025, citing disinflation and the easing of monetary policies as key drivers.

In its 2024 Article IV consultation report, the IMF projected the Philippine economy to grow by 5.8% in 2024, up from 5.5% this year, and further expand to 6.1% in 2025. The report highlighted the resilience of the Philippine economy amid external shocks and tighter global monetary conditions.

“Growth is expected to accelerate in 2024-2025, supported by disinflation and gradually declining borrowing costs as monetary policy normalizes,” the IMF stated.

The IMF estimates potential medium-term growth for the Philippines at 6% to 6.3%, driven by the country’s abundant natural resources, untapped blue economy, and demographic dividend. To unlock this potential, the IMF emphasized the need for comprehensive structural reforms in areas such as infrastructure, governance, healthcare, education, and agricultural productivity.

Inflation Trends and Monetary Policy
Inflation is forecast to ease to 3.2% in 2024, a significant improvement from 6% in 2023, attributed to lower rice import tariffs and other measures to reduce food prices. This decline in inflation is expected to boost consumption and contribute to economic growth.

With inflation stabilizing, the Bangko Sentral ng Pilipinas (BSP) has room to further reduce policy rates. The BSP has already lowered rates by a total of 75 basis points in 2023. However, the IMF advised a cautious approach, highlighting the need for clear communication to manage expectations amidst uncertainties and frequent supply-side shocks.

Risks to Growth
The IMF warned that risks to the Philippines’ growth outlook remain tilted to the downside. These include commodity price volatility, potential supply shocks, geopolitical tensions, prolonged tight monetary policies in advanced economies, slower growth in major economies, and the impacts of natural disasters or extreme climate events.

Despite these challenges, the IMF praised the Philippine government’s efforts to navigate external headwinds and its commitment to inclusive growth. Strengthened social protection programs and continued reform momentum will be critical to achieving sustained economic progress, the report noted.