IMF, Moody’s slash Philippines growth outlook

Upgrade to High-Speed Internet for only ₱1499/month!

Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.

Visit Suniway.ph to learn

April 15, 2026 | 12:00am

MANILA, Philippines — The Philippines’ growth outlook for 2026 has been sharply downgraded by the International Monetary Fund (IMF) and Moody’s Ratings, citing weaker momentum, domestic governance concerns and escalating global risks.

In an email response, an IMF spokesperson said Philippine gross domestic product (GDP) growth is now projected at 4.1 percent in 2026, significantly lower than the 5.6 percent forecast in January, while the 2027 projection was retained at 5.8 percent.

“The weaker 2026 outlook reflects lower-than-expected growth in late-2025 and associated base effects, continued confidence impacts from the flood-control corruption scandal and the war in the Middle East,” the IMF said.

The Fund noted that risks to the country’s outlook are skewed to the downside, while inflation pressures remain on the upside amid risks of a prolonged war in the Middle East, further escalation of geopolitical tensions and higher trade policy uncertainty.

It added that domestic risks include “the impact of corruption allegations related to flood-control projects, extreme climate events and weaker-than-expected reform momentum.”

Inflation is also expected to accelerate in the near term, driven largely by higher global commodity prices.

The IMF projects Philippine inflation to average 4.3 percent in 2026, before easing to 3.2 percent in 2027.

“Inflation is projected to increase to 4.3 percent in 2026, reflecting higher global energy and other commodity prices, before decreasing to 3.2 percent in 2027,” it said.

Despite the pickup in inflation, the IMF said the Bangko Sentral ng Pilipinas (BSP)’s monetary policy could remain supportive of growth for now.

“An accommodative monetary policy stance remains appropriate amid a widening negative output gap; but the BSP should be ready to tighten monetary policy if risks of de-anchoring inflation expectations arise,” the Fund said.

The Philippines’ weaker outlook comes as the IMF also trimmed its global growth projections, underscoring a more fragile economic environment.

The IMF warned that downside risks dominate the global outlook, particularly for emerging markets like the Philippines.

“Downside risks dominate,” the report said, citing the possibility of a prolonged or intensifying conflict that could disrupt energy markets and trigger a broader shock.

Commodity-importing economies are especially vulnerable, as higher oil and food prices, coupled with currency depreciation, could amplify inflation and weigh on growth.

According to the April 2026 World Economic Outlook, global output is expected to expand by 3.1 percent in 2026 and 3.2 percent in 2027, slower than the roughly 3.4-percent pace seen in 2024 to 2025.

The 2026 global forecast marks a 0.2-percentage-point downgrade from the January update, largely reflecting disruptions caused by the ongoing conflict in the Middle East.

Meanwhile, Moody’s also trimmed its growth forecasts for the Philippines to settle at 4.9 percent in 2026, down from its earlier 5.5 percent projection. Likewise, its 2027 growth was also revised lower to 5.3 percent from 5.6 percent.

The downgrade reflects mounting headwinds, including elevated energy prices and geopolitical tensions, particularly the ongoing conflict in the Middle East, which are expected to dampen domestic demand and raise inflation pressures.

“The conflict in the Middle East has increased downside risks to the Philippines’ economic outlook by raising global energy prices and external cost pressures,” Moody’s said, noting that higher fuel and import costs could erode real incomes and weigh on consumption.

Inflation is now projected to average 3.7 percent in 2026, higher than the previous estimate of three percent, and 3.5 percent in 2027, also above earlier forecasts.

Looking ahead, the ratings agency expects domestic demand to remain subdued, with elevated energy costs, trade uncertainty and climate risks continuing to weigh on activity.

At the same time, the Philippines’ credit profile continues to be anchored by structural strengths, including a young population, resilient consumption, steady remittance inflows and a services-driven economy.

However, these are tempered by challenges such as low per capita income, governance constraints and high exposure to climate-related risks.