THE INTERNATIONAL Monetary Fund (IMF) raised its gross domestic product (GDP) growth forecast for the Philippines for 2026 but kept its projection for this 12 months amid heightened global uncertainty.
In its latest World Economic Outlook (WEO), the IMF upwardly revised its 2026 Philippine growth forecast to five.9% from 5.8% previously. Nevertheless, this may be below the federal government’s 6-7% GDP growth goal for next 12 months.
The IMF’s Philippine economic growth projection for 2026 is higher than Indonesia (4.8%), Malaysia (4%), and Thailand (1.7%).
At the identical time, the IMF maintained its GDP growth forecast for the Philippines at 5.5% this 12 months, the identical as its estimate in April. This might fall on the low end of the federal government’s 5.5-6.5% goal range for 2025.
The IMF projects the Philippines’ GDP growth this 12 months to outpace that of Indonesia (4.8%), Malaysia (4.5%), and Thailand (2%).
“Because the April 2025 WEO, uncertainty has remained elevated at the same time as effective tariff rates have come down,” the IMF said in its report.
US President Donald J. Trump announced a 19% tariff on Philippine goods, following a gathering with President Ferdinand R. Marcos, Jr. last week. The brand new rate will take effect on Aug. 1
On the time the April WEO got here out, the Philippines was slapped with a 17% tariff in Mr. Trump’s initial round of “Liberation Day” tariffs.
The IMF noted that the staff projections within the July update are “based on real-time current trade policy.”
IMF Chief Economist Pierre-Olivier Gourinchas in a speech on the report launch said that the US has “partly reversed course, pausing the upper tariffs for many of its trading partners.”
“Despite these welcome developments, tariffs remain historically high, and global policy stays highly uncertain, with only a couple of countries having reached fully fleshed out trade agreements,” he said.
“This modest decline in trade tensions, nevertheless fragile, has contributed to the resilience of the worldwide economy thus far.”
The IMF anticipates global growth at 3% for 2025 and three.1% for 2026, each higher than its 2.8% and three% projections in April.
“This resilience is welcome, but it is usually tenuous. While the trade shock could transform less severe than initially feared, it continues to be sizeable, and evidence is mounting that it’s hurting the worldwide economy,” Mr. Gourinchas said.
Mr. Gourinchas also warned that risks to the worldwide economy “remain firmly to the downside” as the present trade environment stays “precarious.”
“Tariffs could well reset at much higher levels once the ‘pause’ expires on Aug. 1 or if existing deals unravel. If this were the case, model-based simulations suggest global output could be 0.3% lower in 2026,” he said.
Ongoing trade uncertainty would weigh on investment and activity without comprehensive agreements, he added.
“The geopolitical environment also stays fragile, with a possible for more negative supply disruptions.”
The IMF also flagged high public debt and deficits, which make economies vulnerable to financial shocks.
“The dearth of fiscal space makes these countries especially vulnerable to a sudden tightening in financial conditions that increase term premia.”
“Such tightening becomes much more likely if central bank independence — a cornerstone of macroeconomic, monetary and financial stability — is undermined.”
Mr. Gourinchas said that vital policy recommendations include restoring stability in trade policy; preserving central bank independence; restoring fiscal space and efforts towards long-term productivity.
Meanwhile, Rizal Industrial Banking Corp. Chief Economist Michael L. Ricafort said the IMF can have maintained its 2025 growth projection as a result of expectations of the possible global economic slowdown stemming from the US tariffs.
“Though the local economy is comparatively resilient and fewer affected amid relatively lower goods exports at around three to 5 times smaller in comparison with other major ASEAN (Association of Southeast Asian Nations) countries which are more export-dependent,” he said.
“Local economic growth would even be spurred by expansionary fiscal policy through deficit spending in view of wider budget deficits by the National Government, particularly the broader targets, provided by fiscal space available,” he added. — Luisa Maria Jacinta C. Jocson