IMF sees slower Philippine growth amid graft scandal, global shocks

The Philippine economy may expand slower until next year as global uncertainties and the local corruption controversy continue to drag growth, the International Monetary Fund (IMF) said.

In its latest World Economic Outlook (WEO) released on Monday, the IMF said it expects Philippine gross domestic product (GDP) to grow by 5.6% this year, within the government’s 5%-6% goal.

This is the same projection given following its Article IV Consultation with the country last December, but slightly lower than its 5.7% estimate in the previous WEO.

At the same time, the IMF cut its Philippine GDP growth forecast for 2027 to 5.8% from its 6% projection in October. This also falls within the government’s 5.5%-6.5% target.

“The downward revision in GDP growth projections for 2026 and 2027 reflects the carryover impact from a downward revision in the IMF’s growth forecast for 2025 — from 5.4% to 5.1% — and a slower pace of capital accumulation,” an IMF spokesperson said.

For 2025, the multilateral lender expected Philippine GDP to grow by 5.1%, unchanged from December forecast. However, this is below its 5.4% forecast given in October.

This came after the flood control corruption mess led to slower economic growth and government spending. In the third quarter, GDP grew by 4% — the weakest growth in over four years. This brought year-to-date GDP growth to 5%.

The IMF said that climate shocks in the latter half of the year also contributed to the economic slowdown.

“The downward revision for 2025 in turn reflects a sharper-than-expected slowdown in Q3 amid recent corruption allegations and climate shocks impacting economic activity in the second half of the year,” it said.

In 2025, the Philippines encountered 23 tropical cyclones, affecting millions of Filipinos and leaving billions of pesos in damages nationwide, according to data from the state weather bureau.

The IMF earlier said that weather disruptions have trimmed the country’s GDP by 0.2%-0.3% yearly and accelerated inflation by up to 0.6 percentage point annually.

The multilateral lender said that lingering uncertainty over tighter trade restrictions, geopolitical tensions, and disruptive financial market corrections could dampen the country’s economic growth.

“On the upside, accelerated implementation of structural and governance reforms can boost investment and FDI (foreign direct investment), increase fiscal multipliers and boost potential growth,” it added.

Meanwhile, the IMF forecasts 6% GDP growth for the Philippines in 2028, at the low end of the government’s 6%-7% target.

“Economic growth will be driven by robust consumption and higher investment, supported by monetary policy easing and the authorities’ recent policy initiatives to support private investment,” the IMF said.

The Bangko Sentral ng Pilipinas (BSP) has been on an easing path since August 2024, having delivered a total of 200 basis points (bps) in cuts.

In October and December last year, it slashed the key policy rate by 25 bps each in a move to spur domestic demand amid waning consumer and investor sentiment due to the flood control mess.

The benchmark interest rate now stands at an over three-year low of 4.5%, which the central bank said is already close to their ideal rate, signaling an end to its current easing cycle.

BSP Governor Eli M. Remolona, Jr. has left the door open to another 25-bp cut at their Feb. 19 review but said that further easing may be unlikely considering current economic data.

Still, he noted that a weaker-than-expected growth may prompt them to deliver two rate cuts this year to help stimulate the economy.

Source: Business World

Remittances seen growing despite ‘Trump volatilities’

Overseas Filipino workers’ (OFW) remittances are expected to grow despite a new US tax that took effect Jan. 1.

Maybank Investment Banking Group economist Azril Rosli on Tuesday said that while the bank remained “cautious of potential headwinds from tighter immigration policies and the new one-percent US remittance tax,” remittances were likely to weather “Trump’s volatilities as seen in Trump 1.0 (his first term)” with the support of a “growing share from the Middle East and other parts of Asia.”

The 1.0 percent tax applies to money sent from the US through cash, money orders and cashier’s checks, regardless of the sender’s citizenship. The tax does not apply to transfers made through US banks, US-issued debit or credit cards, or cash carried by hand.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that the US remained the top source of cash remittances, accounting for 40 percent of the year-to-date total.

The central bank, however, has said that remittance data has its limits because money sent home by overseas Filipinos often passes through correspondent banks, most of which are based in the United States, and that remittances sent through couriers are also recorded under the country where the courier’s main office is located, again often the US.

Personal and cash remittances respectively rose by 3.2 percent to $35.7 billion and $32.11 billion as of end-November, latest BSP data showed, from $34.6 billion and $31.1 billion in January-November 2024.

The central bank expects remittances to hit $35.5 billion and $36.6 billion in 2025 and 2026, respectively.

Maybank expects remittances to grow to about $36.5 billion this year.

As for economic growth, the bank said this could remain subdued until next year due to domestic and global uncertainties.

“We continue to evaluate emerging risks from the external trade outlook, geopolitical tensions and tariff-related uncertainties that could impact economic growth and inflation,” Rosli said.

Maybank said growth could have slowed to 4.8 percent in 2025 from 2024’s 5.7 percent — below the government’s 5.5- to 6.5-percent target.

Growth is expected to rebound to 4.9 percent and 5.2 percent this year and in 2027, respectively, below the government’s downwardly revised 5.0- to 6.0-percent and 5.5- to 6.5-percent targets.

The impact of a flood control project scandal is not expected to be long-term, Rosli said, but this would also depend on whether the government takes concrete steps to address the issue.

“...I believe that the risk that it could influence the economic trajectory, it could be lesser if... the situation has been resolved by the government,” Rosli said.

“And I think the government has also been proactive to actually improve the situation and also given focus on the priorities of the budget funding, especially on the priorities for the people as well,” he added.

Moreover, the BSP’s “gradual easing of monetary policy” is expected to support the rebound in economic growth.

Rosli said the central bank could implement two more rate cuts this year — one 25-basis-point cut in the first half and another in the last six months of the year.

“This gradual approach reflects that the BSP needs to balance supporting modest GDP (gross domestic product) growth, while maintaining vigilance on emerging risks from the external trade outlook as well as geopolitical tensions and tariff-related uncertainties,” he said.

Source: Manila Times

The Philippines is moving toward a predominantly urban society

Global urbanization is entering a slower but more complex phase, and the Philippines is moving steadily toward a predominantly urban society that will be shaped by how well it manages its fast-growing cities. The World Urbanization Prospects 2025 (WUP 2025) combines new satellite-based data on built-up areas with improved population modeling, giving a sharper picture of where and how people are concentrating in cities, towns, and rural areas worldwide.

What WUP 2025 shows globally

WUP 2025 confirms that the share of people living in urban areas continues to rise, but the speed of urban growth is slowing compared with the explosive expansion of the late 20th century. Growth is increasingly concentrated in low- and middle-income countries, especially in Asia and Africa, where a relatively small group of countries will account for most of the increase in city dwellers to 2050.

A major innovation in WUP 2025 is its harmonized “Degree of Urbanization” approach, which classifies cities, towns and rural areas using consistent thresholds for population density, size, and contiguity instead of relying solely on differing national definitions. This revision expands coverage to more than 12,000 urban centers of at least 50,000 inhabitants, allowing more granular estimates of city growth and the links between population, land use and built-up expansion.

Urbanization trends that matter

Several global patterns stand out. Cities’ built-up footprints have expanded roughly twice as fast as the world’s population since the 1970s, which means many urban areas are growing outwards faster than they are growing upwards, with implications for transport, infrastructure costs and environmental pressure. At the same time, many countries are seeing the emergence of dense small and medium cities that absorb much of new urban growth, rather than only a handful of megacities.

Future global urban growth will be heavily concentrated: just a few countries will account for over half of the nearly 1 billion additional city residents expected between 2025 and 2050, led by India, Nigeria, Pakistan and others in Africa and South Asia. This concentration raises the stakes for planning, since decisions in these rapidly urbanizing countries will strongly influence climate risk, resource use and inequality worldwide.

Where the Philippines is today

According to recent estimates that draw on the WUP series, around half of the Philippine population is now urban: about 49 to 50 per cent, or roughly 57 to 58 million people out of a total population of around 117 million in 2025. Urban growth remains positive but moderate, with annual urban population growth reported at about 1.5 per cent in 2024, which is faster than urban growth in many high-income countries but slower than in some of the fastest-growing African and South Asian nations.

The country’s urban system is dominated by the Manila urban agglomeration, whose wider built-up metropolitan area is estimated in the mid‑2020s at over 15 million residents, making it one of Asia’s largest megacities. But WUP 2025’s lower 50,000‑person threshold also highlights the growing importance of secondary and emerging cities across Luzon, Visayas and Mindanao, many of which are expanding in population and land area even if they remain far smaller than Metro Manila.

Snapshot: global vs Philippines (circa 2025)

Indicator (approximate)	World (2025)	Philippines (2025)
Urban share of population	About 56–60% living in urban areas.	About 49–50% living in urban areas.
Urban population growth	Slowing globally but still positive, concentrated in Asia and Africa.	Urban growth around 1.5% per year (2024 data as latest benchmark).
Settlement pattern	Rapid expansion of built-up areas, many small and medium cities growing.	One dominant megacity region (Manila) plus a network of fast-growing regional cities.

Key messages for the Philippines

First, the Philippines is on track to become predominantly urban in the coming decades, so planning for an urban majority is no longer optional; it is a demographic certainty. This means national and local policy must treat housing, transport, water, and social services in cities as core development priorities rather than afterthoughts, especially as climate risks like flooding and heat are amplified in dense urban environments.

Second, the pattern of growth matters as much as the pace. WUP 2025’s evidence that global built-up areas are expanding faster than population suggests the Philippines faces real risks from unmanaged sprawl around Metro Manila and other rapidly urbanizing corridors. Compact, transit‑oriented development, strict protection of high‑risk zones, and better coordination between land-use and infrastructure planning will be essential to avoid locking in congestion, high transport costs and vulnerability to disasters.

Third, secondary cities are an opportunity. With WUP 2025 now tracking thousands of smaller urban centers, the data underscore that dispersing economic growth into well‑connected regional hubs can ease pressure on Manila while improving access to jobs and services outside the capital. Strategic investment in mid‑sized Philippine cities—particularly in resilient infrastructure, digital connectivity and human capital—can create alternative growth poles that absorb population growth more sustainably.

Finally, urban policy and climate policy are increasingly the same agenda. The concentration of people and assets in Philippine cities means that progress on emissions reduction, climate adaptation, and disaster risk management will depend on how urban expansion is guided and how existing neighborhoods are upgraded. Using the richer spatial and demographic detail of WUP 2025 alongside national data can help identify hotspots where investments in resilient, inclusive urban development will yield the greatest long‑term dividends.

Source: Ziggurat Real Estate