The International Monetary Fund has cut its economic growth projections for the Philippines for both 2026 and 2027, Daily Tribune reported on September 25.

The downgrade follows a sharp slowdown in the Southeast Asian economy, where public spending has stalled amid investigations into irregularities in state infrastructure contracts. The fund had previously pencilled in growth of 3.9% for 2026 and 5.5% for 2027.

Philippine output expanded just 2.3% in the second quarter, the weakest reading since 2009 when pandemic-hit quarters are excluded. The government blamed further delays in public investment as scrutiny intensified over alleged anomalies in state spending tied to last year's flood control scandal, with probes still under way.

Pescatori, of the IMF, said the second-quarter figures fed into the fund's downward revisions.

"Many of our conversations were pointing to a fast and strong rebound in public investment in the second half of 2026. And with that, also a fast recovery in business. We believe that didn't happen or is not going to happen exactly in line as we predicted," he said.

"So, the 2026 Q2 probably reflects some of the delays in the executions of public infrastructure spending and a more generalized, I would say, weaker business sector. And the energy shock has clearly contributed to the weakness in the business sector."

He set out the threats to the outlook facing the country, pointing to both global and home-grown pressures.

"The main external risks stem from a prolonged Middle East conflict, tighter global monetary conditions, and weaker remittances. Domestically, a weaker rebound in public investment and confidence and more frequent climate events would weigh on growth, while rising leverage and a prolonged property downturn pose financial stability risks," he added.