REFORMS to raise productivity, attract private investments and improve education will help unlock the country’s significant growth potential, the International Monetary Fund (IMF) said.
“Priorities include upgrading the electrical grid, tapping renewable energy potential, and effectively implementing recent legislation to improve the business environment, including to harness gains from artificial intelligence,” IMF Mission Chief Andrea Pescatori said in a briefing at the Bangko Sentral ng Pilipinas (BSP) on September 25.
An IMF team led by Pescatori held meetings in Manila from Sept. 15 to 25 for the 2026 Article IV Consultation.
For this year, Philippine economic growth is projected to hit 3.4 percent.
Economic growth is expected to pick up to 5.1 percent in 2027.
The latest projections were lower than the 3.9 percent for 2026 and 5.5 percent for 2027 earlier forecast of the IMF.
Pescatori attributed the lower projections this year to the slower economic growth in the second quarter of the year, weaker business sentiment and the continuing effects of the energy shock.
“The renewed shock here is having implications also for next year. So the revision for next year now is a combination of the renewed escalation in the Middle East, higher oil, and also food prices, which have (a) negative impact on purchasing power of households especially. And this is combined also with a slower rebound in public investment,” he said.
Headline inflation, meanwhile, is projected to average 5.6 percent this year before moderating to 4.1 percent in 2027.
Amid the still elevated inflation, Pescatori said the Bangko Sentral ng Pilipinas will likely raise rates by another 25 basis points.
Moving forward, Pescatori cited the importance of faster implementation of structural and governance reforms.
“This would foster stronger investment. And the Philippines, moreover, starts from a very low FDI (foreign direct investment). So this means there is a lot of room there to boost foreign direct investment, which would definitely uplift growth for the Philippines,” he said.
“Deeper regional integration in goods and services would further boost growth and resilience.”
Risks to growth, meanwhile, include the prolonged Middle East conflict, tighter global monetary conditions, and weaker remittances.
Pescatori said that domestically, a weaker rebound in public investment and more frequent climate events will also weigh on growth. (PNA)
