MANILA -Philippine economic growth is expected to miss the government’s target for 2024 and 2025, although the outlook has improved amid easing inflation, the International Monetary Fund (IMF) said.
In its latest World Economic Outlook (WEO) report released on Tuesday, IMF slightly upgraded its growth outlook on the Philippines for this year to 6 percent, from 5.9 percent previously.
The better projection reflected the “slightly stronger than expected recovery in investment and exports,” IMF Resident Representative for the Philippines Ragnar Gudmundsson said.
Still, if IMF’s prediction comes true, growth this year would upset the Marcos administration’s ambition of making the economy grow by between 6.5 and 7.5 percent.
Below gov’t target
Economic expansion next year, meanwhile, is expected to be a tad faster at 6.1 percent, according to the WEO report. But the Fund’s outlook for 2025 still comes below the government’s growth target of 6.5 to 8 percent.
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But with the country’s gross domestic product (GDP) growth expected to remain at around 6 to 6.5 percent over the medium term, the Philippines will remain one of the strongest performers in the region and globally, Gudmundsson explained.
“Revisions to the projections could notably be based on the external environment and global growth prospects,” he added.
The Philippine Statistics Authority will release the 2023 GDP numbers on Wednesday, Jan. 31.
Weak China recovery
Moving forward, Gudmundsson said the IMF may cut its growth projection for the Philippines if the global economy abruptly slows and if China, a major trading partner of the Philippines, posts a weaker-than-expected recovery.
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Based on the new WEO, global growth is projected at 3.1 percent in 2024 and 3.2 percent in 2025, below the historical average of 3.8 percent as expensive borrowing rates and a withdrawal of fiscal support amid high debt weigh on economic activity.
On the flip side, an outlook upgrade may be triggered if the global economy manages to make a soft landing from its inflation battle, Gudmundsson added.
On the domestic front, Gudmundsson said a “steadfast implementation of structural reforms to raise productivity and successful efforts to attract more foreign investment” could also lead to an upward revision in IMF’s growth projections. INQ