The International Monetary Fund (IMF) has joined the growing list of institutions that have downgraded their Philippine economic forecasts in the wake of the “Floodgate” scandal.

In its Article IV Consultation with the Philippines, published on its website, the IMF lowered its 2025 growth projection from 5.4 percent in October to 5.1 percent, citing the third-quarter slowdown linked to the controversy over flood control projects.

“Growth is expected to slow to 5.1 percent in 2025 as increasing tariffs weigh on exports and investment, before picking up moderately to 5.6 percent in 2026, a downward revision relative to previous forecasts due to sharper-than-expected slowdown in 2025Q3,” the IMF said.

GDP lowest since Covid-19

Economic expansion averaged 5 percent in the first nine months of 2025, following a third-quarter GDP print of 4.0 percent — the weakest in four years and the lowest since the 3.8 percent recorded in Q1 2021, when strict Covid-19 lockdowns were still in place.

With its latest revision, the IMF joins Standard & Poor’s (S&P), the ASEAN+3 Macroeconomic Research Office (AMRO), the World Bank, and the Asian Development Bank — among other major financial institutions — that have likewise downgraded their Philippine growth outlooks.

Many of these revisions were prompted by the steep contraction in public infrastructure spending triggered by the floodgate scandal, which shaved an estimated 1.3 percentage points off GDP growth according to BPI lead economist Jun Neri.

The IMF noted, however, that inflation has eased due to government efforts to control food prices and a “restrictive monetary policy stance.” It expects inflation to average 1.7 percent in 2025, before rising to 2.8 percent in 2026 “as negative base effects recede.”

‘Tilted to the downside’

The IMF’s Executive Board said the Philippines’ overall growth outlook remains “tilted to the downside” as the economy continues to absorb the fallout from the scandal, alongside risks posed by global trade policies and natural disasters.

“Directors concurred that the balance of risks to the growth outlook is tilted to the downside amid uncertainty from global trade policies, corruption allegations related to flood control projects, and extreme climate events,” the report stated.

It underscored the need for economic diversification, governance reforms, stronger private sector investment, and timely climate responses to support sustained and inclusive growth.

The IMF is a global organization of 191 member countries that promotes economic stability, facilitates international trade, and supports sustainable growth by providing financial assistance, policy advice, and technical expertise to help nations manage balance of payments issues and recover from crises.

The release of the IMF assessment coincides with the conclusion of the Independent Commission for Infrastructure’s probe into anomalous flood control projects, as Filipinos wait with bated breath for signs of an economic rebound in 2026.