Manila: Domestic consumption remains the main driver of the Philippine economy amid the impact of external developments and uncertainties, according to the revised outlook of the International Monetary Fund (IMF).
According to Philippines News Agency, the IMF's updated World Economic Outlook (WEO) released Tuesday indicates that the multilateral lender cut its 2025 growth forecast for the Philippines to 5.5 percent from a previous forecast of 6.1 percent released last January.
An IMF spokesperson stated in an e-mail that despite a more challenging environment, growth in the Philippines is expected to remain relatively robust in 2025. The domestic growth rate, as measured by gross domestic product (GDP), showed minimal change with a 5.23 percent expansion in the last quarter of 2024, slightly down from 5.24 percent in the previous quarter.
The full-year growth reached 5.7 percent, falling short of both the economic managers' target of 6 percent to 6.5 percent and the IMF's earlier forecast of 5.8 percent. The IMF spokesperson attributed the downward revision in the growth forecast for the Philippines to lower-than-expected growth in the fourth quarter of 2024 and external factors, including higher tariffs on Philippine exports to the US, downward revisions to the growth of trading partners, and the impact of increased uncertainty and financial tightening.
The e-mail response highlighted that the change in the growth forecast is not unique to the Philippines and has been observed throughout the region and globally, reflecting recent external developments. The forecast is described as a "reference point" based on available information as of April 4, 2025, and does not include policy measures announced after this date. It is also emphasized that the forecast is subject to significant uncertainty.
Moreover, the IMF noted that recent legislative reforms could potentially accelerate the implementation of domestic infrastructure projects, including those through public-private partnerships, leading to increased foreign direct investment and overall investment. In terms of growth drivers, domestic consumption remains a key factor and is expected to be bolstered by lower inflation and low unemployment.
