MANILA - The Philippine economy is poised for robust growth, surpassing 6 percent in 2025, despite facing numerous global challenges in recent years, as noted by an International Monetary Fund (IMF) official.
According to Philippines News Agency, IMF Mission Chief Eli Arbatli Saxegaard provided insights during a briefing at the Bangko Sentral ng Pilipinas office on Wednesday. Saxegaard, leading an IMF team for the 2024 Article IV Consultation in Manila from September 18 to October 2, stated that the Philippines remains one of the top performers in the region. She projects the economy to grow by 5.8 percent this year, accelerating to 6.1 percent in 2025, spurred by more favorable financial conditions and increased investment.
The updated forecast is a slight revision from earlier projections of 6 percent for 2024 and 6.2 percent for 2025. Saxegaard attributed the downward adjustment primarily to a tepid first-half performance in private consumption, exacerbated by high food prices. Despite the revision, the IMF reaffirms that the Philippines' growth rate remains one of the highest in Asia.
Saxegaard highlighted several risks that could affect this outlook, including a global economic slowdown impacting trade, volatile commodity prices, and potential geopolitical tensions. Conversely, she noted that eased global financial conditions or a surge in private investments from public-private partnerships and foreign direct investment could boost growth further.
The IMF recognizes the Philippines' significant economic potential, citing its rich natural resources, unexplored maritime sectors, and substantial demographic advantages. However, Saxegaard emphasized that realizing this potential hinges on structural reforms and stronger social protections, suggesting improvements in infrastructure, healthcare, education, agriculture productivity, and governance as key areas.
On the inflation front, the IMF projects rates to align with the government's targets for the next two years, forecasting an average of 3.3 percent in 2024 and 3 percent in 2025. These expectations are supported by recent tariff reductions on imported goods and monetary policy adjustments. Saxegaard indicated that a gradual reduction in policy rates might be appropriate as inflation trends towards the target.
IMF Resident Representative Ragnar Gudmundsson also commented on inflation risks, acknowledging that while food price declines could aid monetary policy easing, volatile global commodity prices remain a concern. He underscored the importance of a data-driven approach to monetary policy in navigating these uncertainties.