IMF downgrades Philippines growth outlook

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December 16, 2025 | 12:00am

MANILA, Philippines — The International Monetary Fund (IMF) downgraded its full-year economic outlook for the country after a sharper-than-expected slowdown in the third quarter, noting that US tariffs continue to weigh on exports and investment.

In its latest Article IV Consultation, the IMF now expects the Philippine economy to expand by 5.1 percent for the full year, lower than its 5.4 percent projection in its October outlook.

“Growth is expected to slow to 5.1 percent in 2025 as increasing tariffs weigh on exports and investment,” it said.

The IMF said its directors agreed that risks to the growth outlook are skewed to the downside, driven by uncertainty over global trade policies, corruption allegations linked to flood control projects and the impact of extreme climate events.

“Directors underscored the need to continue prioritizing governance reforms, greater private investment, economic diversification and resilience to climate shocks to sustain inclusive growth,” the IMF said.

For next year, the IMF projects the economy to grow by 5.6, slightly lower than its earlier 5.7 percent forecast, reflecting the sharper-than-expected economic slowdown recorded in the third quarter.

The Philippine economy grew by four percent in the third quarter, slower than the 5.5 percent in the second quarter and the 5.4 percent in the first quarter of the year.

“Efforts to enhance public financial management and raise spending efficiency remain critical, including strengthening overall investment management and procurement to enhance accountability and governance,” it said.

Former Finance Secretary Ralph Recto previously said that the economy is expected to settle between 4.7 and 4.8 percent by year-end.

Last July, the Cabinet-level Development Budget Coordinating Committee set a 5.5 percent to 6.5 percent full-year economic growth target for the Philippines.

The government is expected to revise growth and revenue targets following the high-level economic manager’s meeting last week.

“Real GDP growth slowed down sharply in the third quarter driven by weaker-than-anticipated growth in gross fixed capital formation and private consumption,” the IMF said.

The IMF said that domestic financial conditions have eased under a more accommodative monetary stance, with the real policy rate falling to its estimated neutral level, although equity prices remain subdued.

“Directors emphasized the importance of strengthening governance and the rule of law, reducing corruption vulnerabilities and enhancing human capital and workforce skills to support inclusive and sustainable growth,” it said.