- The Philippines' growth is expected to slow to 5.1 percent in 2025 as increasing tariffs weigh on exports and investment, before picking up moderately to 5.6 percent in 2026, a downward revision relative to previous forecasts due to sharper-than-expected slowdown in 2025Q3.
- Inflation declined amid a restrictive monetary policy stance and concerted efforts by the government to reduce food prices. Inflation is projected to average 1.7 percent in 2025 then pick up to 2.8 percent in 2026 as negative base effects recede.
- Gradual fiscal consolidation over the medium term will help reinforce fiscal space. Accelerated implementation of structural and governance reforms would support investor confidence and raise fiscal multipliers and potential growth.
Washington, DC: On November 24, 2025, the Executive Board of the International Monetary Fund (IMF) concluded the 2025 Article IV consultation [1] with the Philippines. The authorities have consented to the publication of the Staff Report prepared for this consultation [2]
Growth rose to 5.7 percent in 2024 on strong public consumption and investment but moderated to 5.4 percent in the first half of 2025 amid strong imports and an election‑related public spending ban. Real GDP growth slowed down sharply in the third quarter (4.0 percent year-on-year) driven by weaker-than-anticipated growth in gross fixed capital formation and private consumption. Inflation declined amid a restrictive monetary policy stance and concerted efforts by the government to reduce food prices. Headline and core inflation averaged 1.7 and 2.4 percent (year-on-year) in 2025 as of October, respectively. The current account deficit widened to 4.0 percent of GDP in 2024 on weak exports and a rise in outbound tourism. Domestic financial conditions have eased amid a more accommodative monetary policy stance, and the real policy rate has declined to the estimated natural rate, but equity prices are subdued.
Growth is expected to slow to 5.1 percent in 2025 as increasing tariffs weigh on exports and investment, before picking up moderately to 5.6 percent in 2026, a downward revision relative to previous forecasts due to sharper-than-expected slowdown in 2025Q3. Potential growth is estimated to be around 6.0 percent over the medium term. Inflation is projected to average 1.7 percent in 2025 then pick up to 2.8 percent in 2026 as negative base effects recede. The current account deficit is expected to narrow slightly to 3.8 percent and 3.4 percent in 2025 and 2026 respectively, amid lower commodity prices. The risks to the near-term growth outlook are tilted to the downside. The main external risks stem from prolonged global trade policy uncertainty, geopolitical tensions, and disruptive financial market corrections. On the domestic front, more frequent and intense climate shocks would cause notable macroeconomic losses. On the upside, accelerated implementation of structural and governance reforms would support investor confidence and raise fiscal multipliers and potential growth. Risks around inflation are broadly balanced.
Executive Board Assessment [3]
Executive Directors commended the authorities' well calibrated macroeconomic policies and reforms, which have supported successful disinflation and resilient growth amid external headwinds. However, Directors concurred that the balance of risks to the growth outlook is tilted to the downside amid uncertainty from global trade policies, corruption allegations related to flood control projects, and 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.
Directors welcomed the authorities' plan to implement gradual fiscal consolidation over the medium term, which will help reinforce fiscal space and external balance and support a growth friendly strategy. They encouraged the implementation of concrete and durable tax and expenditure measures to limit the need for restraint in priority spending. Efforts to enhance public financial management and raise spending efficiency remain critical, including strengthening overall investment management and procurement to enhance accountability and governance. A number of Directors suggested embedding fiscal targets in a formal fiscal rule.
Directors agreed that the monetary policy stance should remain accommodative amid elevated downside risks to growth and well anchored inflation expectations, and welcomed the authorities' data dependent approach. Directors urged the authorities to continue to allow the exchange rate to play its role as a shock absorber with any interventions used on a temporary basis to address disorderly market conditions. They encouraged continued efforts to deepen capital markets and enhance monetary policy transmission.
Directors concurred that overall systemic financial risks remain moderate but encouraged close monitoring of vulnerabilities in the real estate sector, interconnectedness between banks and complex conglomerate structures, and fast-growing consumer credit including through NBFIs and digital finance. They advised the authorities to enhance the macroprudential policy framework to help preempt the build-up of vulnerabilities and raise buffers. Directors welcomed the Philippines' successful exit from the Financial Action Task Force grey list while noting that advancing AML/CFT efforts should remain a priority.
Directors welcomed recent reforms to improve the business environment and encouraged the authorities to build on these reform efforts by ensuring their effective implementation. Directors also recommended reducing infrastructure and energy gaps and promoting foreign direct investment and productivity. They acknowledged the authorities' efforts to develop deep trade agreements to further enhance global value chain integration and resilience, while noting the need to further lower non-tariff barriers. 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. In view of the Philippines' vulnerability to extreme climate events, Directors welcomed the authorities' efforts to increase resilience to climate shocks and integrate climate risks into policy frameworks.
Table 1. Philippines: Selected Economic Indicators, 2023–2028 [4]
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[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
[2] Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the Philippines and the IMF page.
[3] At the conclusion of the discussion, the Managing Director, as Chair of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summing up can be found here: https://www.imf.org/external/np/sec/misc/qualifiers.htm
[4] Data in this table is based on information available as of November 7, 2025. See the Statement by the IMF Staff Representative, November 24, 2025, on page 81 in the Staff Report (pdf)
