High food, energy prices to weigh on Philippines growth
The Philippine economy is expected to book slower growth than most major Southeast Asian peers this year as high food and energy prices weigh on activity, before staging a stronger rebound in 2027, according to the International Monetary Fund.
Manila, Philippines – The International Monetary Fund (IMF) predicts that the Philippine economy will experience slower growth compared to most of its Southeast Asian counterparts in 2026, primarily due to high food and energy prices, before rebounding more strongly in 2027. The IMF keeps its forecast for Philippine GDP growth at 3.4 percent for this year, with expectations of accelerating to 5.1 percent the following year.
This would place the Philippines behind the growth rates of neighboring countries such as Vietnam, Malaysia, Indonesia, and Singapore. Only Thailand is projected to expand more slowly at 2.1 percent. By 2027, Philippine growth is expected to reach 5.1 percent, matching Indonesia's growth and surpassing Malaysia's 4.6 percent, Singapore's 3 percent, and Thailand's 2.1 percent.
The IMF's October World Economic Outlook (WEO) highlights the impact of rising food and energy prices on the Philippine economy. These shocks have led to higher inflation, with the IMF anticipating Philippine inflation to average 5.6 percent in 2026, compared to lower inflation rates in neighboring countries. The country's reliance on imported fuel and the significant portion of food in household spending make it particularly vulnerable to these shocks.
The government has focused on providing targeted and temporary support to vulnerable households and businesses while allowing energy prices to adjust to higher international fuel costs. This strategy aims to mitigate the shock without hindering economic activity.
The IMF also notes that the recovery in Philippine growth next year will be driven by the economy's existing growth potential, although it is expected to remain below that potential. A gradual rebound in investment, as confidence improves and the effects of the energy shock diminish, will contribute to the recovery. The broader ASEAN-5 grouping, consisting of Indonesia, Malaysia, the Philippines, Singapore, and Thailand, is projected to grow by 4.4 percent in 2026 and 4.3 percent in 2027.
The IMF emphasizes the importance of improving food and energy security to reduce the Philippines' vulnerability to similar economic shocks in the long term. Global growth is expected to slow to 3.1 percent in 2026 from 3.5 percent in 2025, before rebounding to 3.4 percent in 2027.
Written by urgent.news from Philippine Star Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
