By Amanda Lee
Tariffs will curb the Philippines' economic momentum this year, the International Monetary Fund said as it cut its growth forecast for the Southeast Asian country.
"Growth is expected to slow to 5.1% in 2025 as increasing tariffs weigh on exports and investment," the fund said after a team of its officials assessed the state of the country's economy.
Though the IMF then expects growth to pick up moderately to 5.6% in 2026, that is still a downgrade to its prior forecast, reflecting a sharper-than-expected slowdown in the third quarter of this year.
The country's gross domestic product growth slowed to its lowest in over four years during that quarter, reflecting the hit from the a domestic political scandal, as well as U.S. tariffs, which stand at 19% for Philippine exports.
Last week, the Philippine central bank delivered a fifth straight rate cut at its final meeting of the year as it looks to cushion the economy.
"The cut will revive economic activity a bit," pointing to painful governance issues around infrastructure investments, weakened government spending, business confidence and domestic demand, BSP Gov. Eli Remolona said at the time.
In its assessment, the IMF also noted a drag from several severe typhoons that have hit the country in recent weeks.
More frequent and intense climate shocks would cause notable macroeconomic losses, it warned.
"The risks to the near-term growth outlook are tilted to the downside," the IMF said, flagging global trade policy uncertainty, geopolitical tensions, and financial market corrections as the main external risks.
The fund had previously forecast Philippines' growth for 2025 and 2026 at 5.4% and 5.8%, respectively.
The IMF officials urged the country's policymakers to continue prioritizing governance reforms, more private investment, economic diversification, and resilience to climate shocks.
"The monetary policy stance should remain accommodative amid elevated downside risks to growth," it said.
Write to Amanda Lee at amanda.lee@wsj.com
(END) Dow Jones Newswires
December 15, 2025 03:52 ET (08:52 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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