IMF lowers Philippine 2024 growth forecast to 6% from 6.2% estimated in April

June 11, 2024 - 12:43 PM
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The International Monetary Fund (IMF) headquarters building is seen ahead of the IMF/World Bank spring meetings in Washington, U.S., April 8, 2019. (Reuters/Yuri Gripas/File Photo)

 The Philippine economy would likely grow 6% this year, less than forecast in April, the International Monetary Fund said on Monday, but the pace of expansion will pick up from last year as domestic demand recovers.

The IMF’s latest estimate is down from its April forecast of 6.2%, but exceeds the economy’s 5.5% expansion in 2023. The figure was at the lowest end of the government’s 6.0-7.0% target for 2024.

The IMF maintained its 2025 growth forecast of 6.2%.

“Growth is expected to rebound…on the back of stronger consumption demand, higher public and private investment, and a recovery in exports,” the IMF said in a statement.

The outlook is not without downside risks, the IMF said, due to geopolitical tensions, climate-related shocks, and higher interest rates.

The Philippine central bank’s key policy rate is at a 17-year high of 6.50% after a series of rate hikes last year to tame inflation which has come down from a 14-year peak of 8.7% in January last year. Annual inflation averaged 3.5% in the five months to May.

With inflationary risks still tilted to the upside, the IMF said “monetary policy should remain sufficiently restrictive to firmly anchor inflation” within the central bank’s 2.0% to 4.0% target band.

The central bank, which will meet on June 27 to review monetary policy, has said it could reduce rates as early as August and deliver another rate cut in the fourth quarter.

—Reporting by Mikhail Flores; Editing by Bernadette Baum and Martin Petty