By Luisa Maria Jacinta C. Jocson, April 17, 2024; BusinessWorld

THE INTERNATIONAL Monetary Fund (IMF) raised its gross domestic product (GDP) growth forecast for the Philippines for this year and 2025. 

In its latest World Economic Outlook (WEO), the IMF upwardly revised its Philippine growth forecast to 6.2% for this year from 6% previously. This is within the government’s revised 6-7% growth target.

“Real GDP growth for 2024 was revised slightly to 6.2% from the January WEO forecast of 6%, reflecting carryover from a better-than-expected outturn in the last quarter of 2023,” IMF Representative to the Philippines Ragnar Gudmundsson said in an e-mail.

The Philippine economy grew by 5.5% in both the fourth quarter and full-year 2023.

Based on IMF projections for emerging and developing Asia, the Philippines is expected to post the second-fastest GDP growth this year, just behind India (6.8%). It is ahead of Vietnam (5.8%), Indonesia (5%), China (4.6%), Malaysia (4.4%) and Thailand (2.7%).

“Growth in emerging and developing Asia is expected to fall from an estimated 5.6% in 2023 to 5.2% in 2024 and 4.9% in 2025, a slight upward revision compared with the January 2024 WEO Update,” according to the report.

The multilateral lender sees five Association of Southeast Asian Nations member economies (ASEAN-5) to expand by an average of 4.5% this year, slightly lower than the 4.7% forecast it gave previously. 

The ASEAN-5, composed of the Philippines, Singapore, Malaysia, Vietnam, and Indonesia, is forecast to grow by 4.6% next year, slightly higher than its 4.4% projection in January.

For 2025, the IMF sees Philippine GDP growing by 6.2%, a tad higher than its previous forecast of 6.1% but below the government’s 6.5-7.5% target.

Mr. Gudmundsson said the forecast for 2025 is supported by expectations of an “acceleration in domestic demand and investment.”

Next year, the Philippines has the second-fastest projected growth in the region, just behind India and Vietnam (both at 6.5%).

“Over the medium term, structural reforms to close infrastructure and education gaps, attract greater foreign direct investments (FDIs), and harness benefits from the digital economy should help realize a (Philippine) growth potential of about 6-6.5%,” Mr. Gudmundsson said.

“These reforms should be complemented by strengthening existing social protection schemes and addressing climate change through a more integrated strategy that includes a carbon pricing scheme,” he added.

Economic managers are targeting 6.5-8% growth from 2026 to 2028.

Meanwhile, the IMF sees global growth settling at 3.2% for both 2024 and 2025. It raised its 2024 forecast by 0.1 percentage point but kept its 2025 projection unchanged from January.

“Nevertheless, the projection for global growth in 2024 and 2025 is below the historical (2000-2019) annual average of 3.8%, reflecting restrictive monetary policies and withdrawal of fiscal support, as well as low underlying productivity growth,” the IMF said.

It said that emerging market and developing economies are expected to “experience stable growth through 2024 and 2025, with regional differences.”