An International Monetary Fund (IMF) team, led by Elif Arbatli Saxegaard, visited Manila from May 14-20, 2025, to discuss the current economic situation and future outlook of the Philippine economy. At the conclusion of their visit, Ms. Arbatli Saxegaard provided an assessment of the country's economic resilience amidst external challenges.
According to her statement, "The Philippine economy remains resilient despite external challenges." She noted that while U.S. tariffs are anticipated to have a limited direct effect, global policy uncertainties and reduced growth in major economies might affect growth projections. The GDP is expected to grow by 5.5 percent in 2025 and increase slightly to 5.8 percent in 2026.
Consumption is projected to benefit from monetary policy easing due to lower inflation and low unemployment rates; however, private investment may remain subdued. The current account deficit is expected to narrow from 3.8 percent of GDP in 2024 to 3.4 percent in 2025 as commodity prices weaken.
Regarding inflation, Ms. Arbatli Saxegaard mentioned that "Headline inflation fell to 1.4 percent (y/y) in April 2025," largely due to earlier tightening measures and reductions in food prices following tariff cuts on rice last year. Inflation expectations remain stable with projections around the lower end of the target band at 2.2 percent for this year.
The fiscal landscape also saw improvements with a decline in the fiscal deficit from 6.1 percent of GDP in 2023 to 5.7 percent in 2024, aligning with government plans for fiscal neutrality by next year.
Financial stability remains intact as "Systemic financial risks remain contained" with healthy credit growth and robust capital buffers within the banking system; however, there are areas that require monitoring such as banks' exposure to real estate and non-bank financial institutions.
Progress has been made on Anti-Money Laundering/Combating Financing of Terrorism issues leading to the Philippines' removal from the Financial Action Task Force's grey list earlier this year.
In conclusion, Ms. Arbatli Saxegaard highlighted potential growth opportunities tied to demographic advantages and natural resources while emphasizing ongoing reforms aimed at reducing infrastructure gaps and diversifying export markets.
She expressed gratitude towards officials across various sectors for their cooperation during discussions: “The IMF team would like to thank officials in the government, central bank...and representatives of private sector for their constructive engagement.”