“The main external risks stem from prolonged global trade policy uncertainty, geopolitical tensions and disruptive financial market corrections,” said IMF Mission Chief Eli Arbatli Saxegaard.
AMID INTERNAL AND external challenges, the Philippine economy seems to be in trouble with the International Monetary Fund (IMF) adjusting slightly downward its growth projections for the country this year.
According to the IMF, the Philippine economy is still vulnerable to external shocks and the effects of climate change.
“The main external risks stem from prolonged global trade policy uncertainty, geopolitical tensions and disruptive financial market corrections,” said IMF Mission Chief Eli Arbatli Saxegaard.
Saxegaard led an IMF team that held meetings in Manila from Sept. 18 to Oct. 1.
She added that exports and investors will be weighed by higher United States tariffs on Philippine-made products.
Saxegaar also warned about the effects of climate change on the economy,
“On the domestic front, more frequent and intense climate shocks would cause notable macroeconomic losses,” she added.
Hence, the IMF adjusted downwards its gross domestic product (GDP) growth projection for the Philippines to 5.4 percent this year from the previous forecast of 5.5 percent, This is a slowdown from 2024’s 5.7 percent GDP growth.
The IMF’s revised outlook falls below the government’s 5.5- to 6.5-percent target for 2025.
To recall, Philippine GDP growth was below the target of 5.4 percent in the first quarter while the government last June revised downward its 2025 growth target from the previous 6.0 to 8.0, taking into account US trade policies and tensions from the Middle East.
ADDRESSING CORRUPTION
On the current corruption scandal rocking the government, Saxegaard emphasized the need for enhancing accountability, including the budget process.
“Efforts to strengthen budget credibility by enhancing public financial management remains critical, including strengthening investment planning and project appraisal, selection, management and procurement to enhance accountability,” she said.
Also, the IMF will continue to monitor developments on the issue, although the corruption issue’s impact on investor sentiment has yet to be seen.
“[It was] not yet clear whether and how these allegations will impact investor and private sector confidence, as well as their perceptions and behavior,” Saxegaard added
Despite the IMF seeing the Philippine economy as having weaknesses, she said that there are positive aspects that can help foster growth, including the country’s favorable demographics. Also, the government has managed to keep inflation lower, or within its target of 2 to 4 percent this year.
“The Philippine economy has achieved successful disinflation, and growth remains resilient despite negative external spillovers,” Saxegaard said.
“The Philippine economy holds significant potential with a sizable demographic dividend and abundant natural resources,” she added.
 adjusting){kind=link}