The conflict in the Middle East will weigh on global and the Philippines’ economic growth prospects, the International Monetary Fund (IMF) said in a report.

In its World Economic Outlook (WEO) released Tuesday, the IMF projects the Philippine economy to grow by 4.1 percent, lower than the 5.6 percent earlier forecast in January.

“The weaker 2026 outlook reflects lower-than-expected growth in late-2025 and associated base effects, continued confidence impacts from the flood-control corruption scandal, and the war in the Middle East,” an IMF spokesperson said in a separate email.

For 2027, the IMF sees Philippine economic growth accelerating to 5.8 percent.

Inflation, meanwhile, is projected to reach 4.3 percent this year and decelerate to 3.2 percent in 2027.

“Risks to growth are tilted to the downside while inflation risks are tilted to the upside, reflecting the risk of a prolonged war in the Middle East, further escalation of geopolitical tensions, and higher trade policy uncertainty,” the IMF spokesperson said.

Global growth

The IMF said global growth will also be affected by the ongoing conflict in the Middle East.

Under the assumption in the reference forecast that the war turns out to be relatively short-lived, global growth is expected to slow down modestly.

Global economic growth is expected to reach 3.1 percent for 2026 and 3.2 percent for 2027, a deceleration from the estimated 3.4 percent achieved in 2025.

“Compared with the pre-conflict WEO forecasts, growth in the near term is revised downward by 0.2 percentage points. This masks significant variation across countries, with lower-income commodity-importing economies being hit particularly hard through higher energy and food prices as well as foreign exchange depreciation,” the IMF report said. (PNA)