IMF downgrades Philippine economic growth forecast for 2024, 2025 | ABS-CBN
ADVERTISEMENT
![dpo-dps-seal](https://od2-image-api.abs-cbn.com/prod/Seal_Image_OD.png)
Welcome, Kapamilya! We use cookies to improve your browsing experience. Continuing to use this site means you agree to our use of cookies. Tell me more!
IMF downgrades Philippine economic growth forecast for 2024, 2025
IMF downgrades Philippine economic growth forecast for 2024, 2025
Jessica Fenol,
ABS-CBN News
Published Oct 02, 2024 11:26 PM PHT
![Clipboard](https://od2-image-api.abs-cbn.com/prod/ClipboardNews.png)
Makati City skyline on February 20, 2024. Mark Demayo, ABS-CBN News/File
![Makati City skyline on February 20, 2024. Mark Demayo, ABS-CBN News/File](https://od2-image-api.abs-cbn.com/prod/editorImage/172788278381720240220-makati-skyline-MD-3.jpg)
MANILA — The International Monetary Fund said on Wednesday it has slightly downgraded its economic growth outlook for the Philippines in 2024 and 2025, citing the impact of high food prices on private consumption, among others.
MANILA — The International Monetary Fund said on Wednesday it has slightly downgraded its economic growth outlook for the Philippines in 2024 and 2025, citing the impact of high food prices on private consumption, among others.
In a briefing in Manila, IMF Mission Chief and Deputy Division Chief Elif Arbatli-Saxegaard said that the IMF now expects the Philippine economy to grow by 5.8 percent in 2024, lower by .2 percent, compared to its 6 percent estimate back in July.
In a briefing in Manila, IMF Mission Chief and Deputy Division Chief Elif Arbatli-Saxegaard said that the IMF now expects the Philippine economy to grow by 5.8 percent in 2024, lower by .2 percent, compared to its 6 percent estimate back in July.
This is also lower compared to the government’s target growth of 6 to 7 percent.
This is also lower compared to the government’s target growth of 6 to 7 percent.
For 2025, the estimate was downgraded to 6.1 percent from its earlier projection of 6.2 percent. However, Arbatli-Saxegaard underscored that the downgrade was “really small” and that the country remains among the highest growing in the Asian region.
For 2025, the estimate was downgraded to 6.1 percent from its earlier projection of 6.2 percent. However, Arbatli-Saxegaard underscored that the downgrade was “really small” and that the country remains among the highest growing in the Asian region.
ADVERTISEMENT
“I would like to highlight that the downgrade is really small, just .2 percent reflecting the fact that in the first half, private consumption growth was lower than what we had anticipated. This might be driven by higher food prices,” she said.
“I would like to highlight that the downgrade is really small, just .2 percent reflecting the fact that in the first half, private consumption growth was lower than what we had anticipated. This might be driven by higher food prices,” she said.
“It's 6.1 percent growth for 2025, a very respectable growth rate for the context of the other countries in the region so it’s a very small adjustments reflecting the outturns in the first half,” she added.
“It's 6.1 percent growth for 2025, a very respectable growth rate for the context of the other countries in the region so it’s a very small adjustments reflecting the outturns in the first half,” she added.
The economy grew 5.8 percent in the first quarter, but with the household consumption tempered by high food prices including rice. In the second quarter, the economy expanded by 6.3 percent.
The economy grew 5.8 percent in the first quarter, but with the household consumption tempered by high food prices including rice. In the second quarter, the economy expanded by 6.3 percent.
Meanwhile, easing inflation, gradual monetary policy reduction, an uptick in foreign direct investments (FDI) as well as growth in private-public partnerships are seen to buoy the economy moving forward. Further easing in inflation is also anticipated due to the adjustments made by the Bangko Sentral ng Pilipinas and other non-monetary policy measures.
Meanwhile, easing inflation, gradual monetary policy reduction, an uptick in foreign direct investments (FDI) as well as growth in private-public partnerships are seen to buoy the economy moving forward. Further easing in inflation is also anticipated due to the adjustments made by the Bangko Sentral ng Pilipinas and other non-monetary policy measures.
“We believe that decisive monetary tightening and other measures have helped mitigate inflationary pressures in the Philippines, recent tariff cuts on imported rice and other non-monetary policy measures helped reduce food prices and should further ease headline inflation by year-end,” said Arbatli-Saxegaard.
“We believe that decisive monetary tightening and other measures have helped mitigate inflationary pressures in the Philippines, recent tariff cuts on imported rice and other non-monetary policy measures helped reduce food prices and should further ease headline inflation by year-end,” said Arbatli-Saxegaard.
The BSP in August cut its target reverse repurchase rate by 25-basis points to 6.25 percent. More rate cuts are anticipated after the US Federal Reserve also reduced its benchmark policy rate. Fitch Solutions’ Unit, BMI, expects the BSP to deliver “jumbo” rate cuts to bring the interest rate back to its pre-pandemic level of 4.5 percent in 2025.
The BSP in August cut its target reverse repurchase rate by 25-basis points to 6.25 percent. More rate cuts are anticipated after the US Federal Reserve also reduced its benchmark policy rate. Fitch Solutions’ Unit, BMI, expects the BSP to deliver “jumbo” rate cuts to bring the interest rate back to its pre-pandemic level of 4.5 percent in 2025.
However, the IMF said risks to growth remain tilted to the upside, stemming from the slowdown in major economies, geopolitical tensions as well as commodity price volatility. Therefore, the central bank should remain cautious in cutting the country’s benchmark policy rate, it said.
However, the IMF said risks to growth remain tilted to the upside, stemming from the slowdown in major economies, geopolitical tensions as well as commodity price volatility. Therefore, the central bank should remain cautious in cutting the country’s benchmark policy rate, it said.
“The data dependent approach is very important, so yes there is loosening but caution is still necessary in the coming months because of uncertain environment,” said IMF Philippine Resident Representative Ragnar Gudmundsson.
“The data dependent approach is very important, so yes there is loosening but caution is still necessary in the coming months because of uncertain environment,” said IMF Philippine Resident Representative Ragnar Gudmundsson.
FATF GREY LIST
Meanwhile, the IMF said the country has had significant progress in addressing financial crimes but it still recommended to maintain the efforts being done to exit the Finance Action Task Force’ (FATF) grey list.
Meanwhile, the IMF said the country has had significant progress in addressing financial crimes but it still recommended to maintain the efforts being done to exit the Finance Action Task Force’ (FATF) grey list.
President Ferdinand Marcos Jr. in January said it has ordered government agencies to address gaps in money laundering and other financial crimes in order to exit the FATF gray list.
President Ferdinand Marcos Jr. in January said it has ordered government agencies to address gaps in money laundering and other financial crimes in order to exit the FATF gray list.
“We also note that important progress has been made in addressing anti money laundering, combating financing terrorism and the current momentum should be maintained to close the outstanding gaps in the AML safety framework which should prompt removal from the Financial Action Task Force Grey List,” Arbatli-Saxegaard said.
“We also note that important progress has been made in addressing anti money laundering, combating financing terrorism and the current momentum should be maintained to close the outstanding gaps in the AML safety framework which should prompt removal from the Financial Action Task Force Grey List,” Arbatli-Saxegaard said.
In June, the Anti Money Laundering Council had said the Philippines “has moved closer to exiting the FATF grey list” as it continues to address gaps and issues, and improve policies meant to combat financial crimes.
In June, the Anti Money Laundering Council had said the Philippines “has moved closer to exiting the FATF grey list” as it continues to address gaps and issues, and improve policies meant to combat financial crimes.
ADVERTISEMENT
ADVERTISEMENT