IMF downgrade puts PH near bottom of emerging Asia growth table
The Philippines is set to record the second-weakest growth in emerging and developing Asia this year, the International Monetary Fund (IMF) said in its latest projections, cutting its outlook as the war in the Middle East compounds the drag from a recent corruption scandal.
In its newest World Economic Outlook, the fund lowered its 2026 growth forecast for the Philippines to 4.1 percent from 5.6 percent.
If realized, the pace would be the weakest since the economy expanded 3.9 percent in 2011, excluding the pandemic-driven contraction in 2020. It would also fall short of the Marcos administration’s 5-percent to 6-percent target for 2025, extending a streak of missed growth goals that began in 2023.
The downgrade highlights the economy’s heightened exposure to the oil crisis compared with its regional peers. The IMF now expects Philippine growth to trail the 4.9 percent average for emerging and developing Asia and rank second-weakest in the group, ahead only of Thailand, which is projected to grow 1.5 percent this year.
The fund expects activity to rebound to 5.8 percent in 2027, near the lower end of the government’s 5.5-percent to 6.5-percent growth target. Even so, that would fall short of the economy’s estimated growth potential of about 6 percent.
The IMF released its sobering projections as it convenes its Spring Meetings with the World Bank this week, where policymakers are expected to focus on cushioning economies from shocks linked to the energy crisis triggered by the Middle East war. Last week, the World Bank cut its growth forecast for the Philippines this year to 3.7 percent from 5.3 percent before, while the Asian Development Bank trimmed its outlook to 4.4 percent from 5.3 percent.
All three multilateral institutions pointed to the same strain: The Philippines—still recovering from the fallout of a major graft scandal—is confronting a historic oil price shock at a delicate moment.
“The weaker 2026 outlook reflects lower‑than‑expected growth in late‑2025 and associated base effects, continued confidence impacts from the flood‑control corruption scandal, and the war in the Middle East,” an IMF spokesman said.
“Risks to growth are tilted to the downside while inflation risks are tilted to the upside, reflecting the risk of a prolonged war in the Middle East, further escalation of geopolitical tensions, and higher trade policy uncertainty,” the spokesman added.
Domestic inflation has already begun to accelerate, rising to a near two-year high of 4.1 percent in March and edging past the central bank’s 2-percent to 4-percent target range. The government has declared a national energy emergency—the first country to take such a step—as pump prices surged.
The fund expects inflation to average 4.3 percent this year and 3.2 percent next year. It said the Bangko Sentral ng Pilipinas (BSP) should stand ready to raise interest rates if price pressures broaden.
Moody’s outlook
Separately, Moody’s Ratings raised its inflation forecast for the Philippines to 3.7 percent in 2026, from 3 percent previously, citing higher global oil prices and broader import cost pressures. Inflation is expected to ease slightly to 3.5 percent in 2027.
While still within the BSP’s target range, the global debt watcher said price pressures were becoming more entrenched. The government itself expects inflation to climb further in April, potentially hitting as high as 14 percent, as fuel price pressures persist.
