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

THE Philippine economy would likely grow 6 per cent this year, less than forecast in April, the International Monetary Fund said on Monday (Jun 10), 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 per cent, but exceeds the economy’s 5.5 per cent expansion in 2023. The figure was at the lowest end of the government’s 6 to 7 per cent target for 2024.

The IMF maintained its 2025 growth forecast of 6.2 per cent.

“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 6.5 per cent after a series of rate hikes last year to tame inflation which has come down from a 14-year peak of 8.7 per cent in January last year. Annual inflation averaged 3.5 per cent in the five months to May.

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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 to 4 per cent target band.

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