Philippines growth outlook dims

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January 20, 2026 | 12:00am

IMF lowers 2025-2027 forecasts

MANILA, Philippines — The International Monetary Fund (IMF) lowered its economic growth projections for the Philippines, citing weaker near-term momentum, lingering spillovers and slower capital accumulation, based on its latest World Economic Outlook update.

The IMF now expects the Philippine economy to have grown by 5.1 percent in 2025, down from its earlier forecast of 5.4 percent. Gross domestic product (GDP) for 2026 was also lowered to 5.6 percent from 5.8 percent, while the 2027 projection was cut to 5.8 percent from a previous estimate of 6.1 percent.

“The downward revision in GDP growth projections for 2026 and 2027 reflects the carryover impact from a downward revision in the IMF’s growth forecast for 2025 and a slower pace of capital accumulation,” it said.

The multilateral lender explained that the weaker outlook in the outer years is closely tied to developments last year, with growth losing more momentum than previously anticipated.

“The downward revision for 2025 in turn reflects a sharper-than-expected slowdown in the third quarter amid recent corruption allegations and climate shocks impacting economic activity in the second half of the year,” the IMF said.

The Philippine economy grew by just four percent in the third quarter of 2025, slower than the previous quarter’s 5.5 percent expansion and the 5.2 growth posted in the third quarter of 2024.

The IMF cautioned that risks to the Philippine outlook are titled to the downside, citing the possibility of renewed trade tensions, geopolitical shocks and disruptive financial market corrections.

“Extreme climate events and lower-than-expected reform momentum represent other domestic downside risks. On the upside, accelerated implementation of structural and governance reforms can boost foreign direct investments, increase fiscal multipliers and boost potential growth,” it added.

At the global level, the IMF said the world economy remains resilient despite uneven momentum across regions. Global growth is projected to hold steady at 3.3 percent in 2026 and ease slightly to 3.2 percent in 2027, broadly in line with the estimated 3.3 percent expansion in 2025.

The multilateral lender said this steady performance reflects the “balancing of divergent forces,” with headwinds from shifting trade policies offset by strong investment in technology, including artificial intelligence, as well as accommodative financial conditions and fiscal support in major economies.

For emerging market and developing economies, growth is expected to remain just above four percent in 2026 and 2027, supported by easing financial conditions and resilient domestic demand in several countries.