WASHINGTON, D.C. — The Philippines could regain economic momentum later this year or by early 2027 if energy related shocks prove temporary and the domestic investment climate improves, according to the International Monetary Fund (IMF).
In an interview with BusinessWorld, IMF Asia Pacific Department Director Krishna Srinivasan said easing external pressures and recovering domestic demand, particularly investments, could lift the country’s growth to 5.8% in 2027. He noted that if the shock remains short lived, economic conditions may normalize, allowing both domestic and external demand to strengthen.
Under this scenario, growth would pick up after the IMF’s downgraded 4.1% estimate for this year and the 4.4% expansion recorded last year. However, Srinivasan said risks remain if energy price increases become more persistent or if supply disruptions continue, which could reduce growth projections.
He added that alternative scenarios in the IMF’s World Economic Outlook suggest that prolonged external shocks could reduce growth in Asia by one to two percentage points, with potentially larger impacts on more exposed economies such as the Philippines.
Domestic factors are also weighing on the near term outlook. Governance concerns tied to a flood control corruption controversy in late 2025, along with potential supply disruptions from natural disasters, have affected investment, public spending, and household consumption. These developments contributed to slower economic growth last year.
For the broader region, the IMF expects the ASEAN 5 economies, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, to expand by 4.1% this year and improve to 4.4% next year. The fund said easing uncertainty could support stronger domestic demand and increased investment across Southeast Asia.
Srinivasan noted that stronger regional integration could help cushion external shocks. The Philippines, which currently chairs ASEAN, has an opportunity to promote deeper cooperation through intra regional trade, financial integration, and digitalization initiatives. Increased regional demand could support investment and consumption within Asia.
He also highlighted the need for ASEAN economies to improve domestic revenue mobilization, noting that government revenue as a share of GDP remains relatively low in many member countries. Strengthening fiscal capacity would improve resilience against external shocks.
The IMF official added that expanding the region’s services sector and enhancing trade within ASEAN could further support growth. Currently, only about 20% of ASEAN trade occurs within the region, suggesting room for deeper economic integration.
Meanwhile, ASEAN+3 efforts to strengthen the Chiang Mai Initiative Multilateralization (CMIM), a regional currency swap arrangement, were described as timely. The mechanism, originally created after the 1997 Asian Financial Crisis, is being expanded to serve as a financial safety net during periods of market stress.
Philippine central bank Governor Eli M. Remolona Jr. previously said ASEAN leaders are working to enhance the CMIM to provide additional liquidity support to member economies. The initiative complements broader global financial safety nets and could help stabilize the region during future shocks.
#SupplyChainNews #EconomicOutlook #PhilippineEconomy #ASEAN #GlobalMarkets
