PH growth lags targets; but IIF sees resilience ahead
The Philippines is set to maintain steady growth, although still falling short of the Marcos administration’s target, as global trade performance and domestic demand help navigate some Asian countries to resiliency, the Institute of International Finance (IIF) said.
In its latest outlook, the IIF projected the Philippine economy to expand 4.7 percent in 2025 and 4.8 percent in 2026. The 2025 figure mirrors earlier estimates by former Finance Secretary Ralph Recto and remains below the government’s 5.5 to 6.5 percent target range for the year.
Meanwhile, the 2026 forecast also falls short of the government’s 6 to 7 percent goal.
Despite this, the IIF said the Philippines—along with other major economies in the Asia-Pacific—was moving steadily toward fiscal consolidation, even after being rattled by the flood control corruption scandal that shook investor sentiment and business confidence.
Zooming out, the IIF noted that the Asia-Pacific region remains resilient despite a “turbulent external environment,” with economies absorbing the impact of higher US tariffs and political uncertainty.
Regional growth is projected to reach 5.3 percent in 2025 before easing to 4.9 percent in 2026, supported by strong export performance, solid foreign direct investments (FDI) inflows and deepening integration into global technology and electronics supply chains.
However, recent developments in the Philippines contradict IIF’s resilient outlook.
The country recently posted a double-digit surge in export growth, helping narrow the trade deficit by more than a third in October. Much of this was driven by electronics.
However, export prospects have been tempered by global uncertainties. The export target was recently downgraded to between $110.8 billion and $113.4 billion, over 30 percent lower than the original range, as persistent external headwinds and US tariff risks cloud the outlook.
This comes even as more than $1 billion worth of Philippine agricultural exports bound for the US will be spared from the 19-percent tariff imposed last August.
FDI also showed mixed signals. Net inflows in August turned positive after months of outflows, but remained 40 percent lower than a year earlier.
In fact, these developments have already prompted Economic Planning Secretary Arsenio Balisacan to acknowledge that the Marcos administration is now unlikely to meet its full-year growth target, citing persistent external headwinds and uneven sectoral performance.
Even so, the IIF remains bullish that the broader Asia-Pacific region is still “well-positioned” in a challenging global environment.
“The region’s diversity is a major strength. Large and young labor forces, competitive manufacturing bases, strong digital-services capabilities, and expanding roles in critical minerals and strategic supply chains continue to draw capital to the region,” it said.
