IMF projects over 6% growth for PH economy in 2025

The International Monetary Fund (IMF) has projected that the Philippine economy will grow by over 6 percent in 2025, reflecting resilience amid recent external challenges. IMF Mission Chief Eli Arbatli Saxegaard announced the optimistic outlook during a briefing at the Bangko Sentral ng Pilipinas office in Manila on Wednesday.

In a recent visit from September 18 to October 2, an IMF team, led by Saxegaard, conducted discussions regarding the Philippine economy as part of the 2024 Article IV Consultation. The IMF anticipates the economy will grow by 5.8 percent this year, with an expected acceleration to 6.1 percent in 2025. Saxegaard noted that this growth is bolstered by more accommodative financial conditions and increased investment.

While the latest projections mark a slight downward adjustment from previous forecasts of 6 percent for 2024 and 6.2 percent for 2025, Saxegaard emphasized that the downgrade was minimal—only 0.2 percent. She attributed this to lower-than-expected growth in private consumption during the first half of the year, which may have been influenced by high food prices.

Despite the revision, she affirmed that the Philippines continues to be among the highest-growing economies in the region, with 6.1 percent growth for 2025 representing a "very respectable rate."

Saxegaard highlighted potential downside risks to the country’s growth, including slowdowns in major economies, commodity price volatility, and geopolitical tensions. Conversely, easing global financial conditions and accelerated private investment from public-private partnerships could foster higher growth.

The IMF believes the Philippines holds significant potential due to its rich natural resources, untapped blue economy, and a young and growing population.

However, unlocking this potential will depend on implementing structural reforms and enhancing social protection programs. Key priority areas identified include improving infrastructure, investing in healthcare and education, addressing agricultural productivity challenges, and enhancing governance.

On the topic of inflation, Saxegaard projected that it would remain within the government’s target for both 2024 and 2025, expecting an average of 3.3 percent this year and 3 percent in the following year. She noted that decisive monetary tightening and recent tariff cuts on imported rice have helped alleviate inflationary pressures.

IMF Resident Representative to the Philippines, Ragnar Gudmundsson, echoed the sentiment of cautious optimism, acknowledging both upside and downside risks to inflation.

He pointed out that further decreases in food prices could support monetary policy easing, while fluctuations in global commodity prices, particularly oil, could pose challenges.