The country’s central bank (BSP) has successfully addressed inflationary pressures, supported by concerted measures of the government to reduce food prices. With inflation and inflation expectations returning to target, BSP has room to continue to reduce the policy rate, it noted after an IMF team led by Elif Arbatli Saxegaard held meetings in Manila during May 14-20 to discuss recent economic and financial developments and the outlook for the economy.
The prospect of further monetary easing, and lower food prices will underpin the recovery in consumption, it observed in a release.
Adhering to the medium-term fiscal consolidation path remains critical and requires sustained and durable efforts to mobilize tax revenues and ensure efficiency of government spending, the IMF noted.
“Consumption is expected to be supported by monetary policy easing amid lower inflation, and low unemployment; however, private investment is projected to remain subdued. Risks are tilted to the downside, driven mainly by external factors but also by the weaker-than-expected outturn in the first quarter,” Saxegaard said.
“The current account deficit is projected to narrow from 3.8 per cent of GDP [gross domestic product] in 2024 to 3.4 per cent of GDP in 2025, supported by weaker commodity prices. Reserves have declined since peaking in September 2024 but remain adequate at $105.3 billion as of April 2025,” she added.
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