IMF sees Phl economy growing 5.5% in 2025

Despite global uncertainties, the Philippine economy remains resilient and is poised for moderate growth, according to the International Monetary Fund (IMF).

Following a series of consultations in Manila from May 14 to 20, IMF Mission Chief Elif Arbatli Saxegaard reported that the country’s gross domestic product is projected to expand by 5.5% in 2025 and 5.8% in 2026.

“The Philippine economy holds significant potential with a sizable demographic dividend and abundant natural resources. The government has been undertaking reforms to reduce infrastructure, health and education gaps, promote foreign direct investment, and diversify the country’s export markets,” Saxegaard said.

She noted that these structural reforms could be bolstered by enhanced social protection programs, increased digitalization, and stronger climate resilience strategies.

The IMF warned, however, that global headwinds—such as policy uncertainty and weaker growth in advanced economies—may temper the Philippines’ expansion. Still, strong domestic consumption, buoyed by declining inflation, lower interest rates, and steady employment, is expected to drive growth.

Inflation is forecast to ease to 2.2% this year, well within the government’s target range of 2% to 4%. This, Saxegaard said, could open room for the Bangko Sentral ng Pilipinas (BSP) to ease monetary policy further.

“Risks of higher inflation include adverse weather and other supply shocks, including potential disruptions in global supply chains, and risk-off shocks, which could contribute to currency depreciation,” she cautioned.

On the external front, the IMF anticipates the country’s current account deficit will shrink to 3.4% of GDP this year from 3.8% in 2024, thanks in part to subdued global commodity prices.

The report also highlighted progress in public finance, noting a reduction in the fiscal deficit—from 6.1% of GDP in 2023 to 5.7% in 2024—aligning with government targets. Saxegaard stressed the importance of maintaining fiscal discipline through sustainable tax reforms and efficient spending.

“The fiscal deficit declined from 6.1 percent of GDP in 2023 to 5.7 percent in 2024, largely in line with the government’s latest fiscal program, and the overall fiscal stance is expected to be broadly neutral in 2025,” she said.

The IMF also commended the Philippines for its robust financial sector, characterized by stable credit growth, and strong banking capital and liquidity positions.

“Important progress has been made in addressing Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) issues, as exemplified by the Philippines’ welcome exit from the Financial Action Task Force (FATF) gray list in February 2025. The current momentum should be maintained,” Saxegaard added.