Tunis:The Philippine economy is expected to recover next year, driven by a gradual rebound in investments, as projected by the International Monetary Fund (IMF).

According to Philippines News Agency, the IMF's World Economic Outlook anticipates that the country's economic growth will accelerate to 5.1 percent next year, up from 3.4 percent this year. An IMF spokesperson highlighted the country's robust recovery, attributing it to the Philippines' strong growth potential compared to many ASEAN peers.

The recovery is projected to be fueled by a gradual rebound in investment as confidence improves and the effects of the energy shock diminish. The IMF's forecast for the Philippines surpasses the growth projections for other countries in emerging and developing Asia, including Thailand's 2.1 percent, China's 4 percent, and Malaysia's 4.6 percent.

Headline inflation is expected to remain elevated, with projections of 5.6 percent this year and 4.1 percent in 2027. The IMF emphasized the importance of monetary policy in preventing temporary price shocks from turning into persistent inflation, while not unnecessarily weakening economic activity.

The IMF spokesperson noted that with inflation expectations broadly anchored and substantial spare capacity in the economy, further monetary tightening should be contingent on persistent inflationary pressures or stronger second-round effects. Enhancing food and energy security is deemed essential to reducing the Philippines' vulnerability to future shocks.

Potential risks to growth include renewed delays in public infrastructure investment, persistently high energy and food prices, and weaker investor confidence. The IMF stressed that restoring public investment while strengthening governance will be crucial for a durable recovery.