The Philippine economy achieved one of the highest growth rates among emerging economies in 2022, with GDP growth forecast to moderate to 6 per cent in 2023 due to a challenging external environment, as per the International Monetary Fund (IMF).

An IMF team led by Shanaka Jay Peiris met with officials in Manila from May 8-12 to discuss recent economic and financial developments. "The Philippine economy has achieved one of the strongest recoveries in emerging markets following the pandemic-related deep economic downturn," Peiris said in a statement.

The Bangko Sentral ng Pilipinas (BSP) has increased the policy rate to 6.25 per cent, anchoring inflation expectations. However, persistent core inflation suggests that a tighter stance may be necessary for an extended period.

“The regional tripartite wage setting system has served the country well and should continue to link wage increases to productivity gains. Risks to inflation remain on the upside, and a continued tightening bias may be appropriate until inflation falls decisively within the 2-4 per cent target range. The current account deficit is expected to narrow to 2.5 per cent of GDP in 2023 from 4.4 per cent in 2022 mainly due to declining commodity prices,” Peiris added.

Peiris emphasised that fiscal consolidation is in progress, supporting monetary policy and contributing to debt sustainability. Efforts for medium-term fiscal consolidation are encouraged, focusing on enhancing targeted social spending, promoting infrastructure investment, and facilitating climate transition objectives.

Despite the global banking turmoil, the Philippines has experienced limited impact. Yet, the IMF advised close monitoring of the financial system due to tightening conditions. Peiris also stressed the importance of structural reforms to boost productivity and address climate change through a green growth strategy.

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