For decades, governments have relied on the International Monetary Fund’s (IMF) World Economic Outlook (WEO) as an anchor for assessing global conditions in both the near and medium term. Issued twice a year with interim updates, the WEO has become indispensable to IMF surveillance and to member countries’ macroeconomic planning. In practice, it helps set the external assumptions for projections on growth, inflation, the fiscal stance, monetary policy, and the external accounts.
This is the context within which the Philippine government, through the Development Budget Coordination Committee (DBCC), framed its medium-term macroeconomic assumptions for 2025-2028 last June. Taking its cue from heightened global uncertainties — driven by the Middle East conflict, elevated US tariffs, and other geopolitical tensions — the DBCC nonetheless maintained a positive medium-term outlook. Growth, however, was downgraded to 5.5-6.5% for 2025 and 6-7% for 2026.
All these assumptions were set before President Ferdinand “Bongbong” Marcos, Jr.’s State of the Nation Address, where he flagged the ghost flood-control projects later amplified by Senator Panfilo Lacson’s exposé. Since then, corruption has taken center stage. Lawmakers have been linked to plunder, government officials charged, the stock market has skidded, and the peso has drifted toward P60 to the dollar. Suddenly, the macro outlook could no longer float above politics. Governance failures had barged into the room.
During the government’s forthcoming macro review, the WEO updates should be able to offer some reason for guarded optimism. The IMF itself noted that front-loading of exports ahead of tariff changes helped sustain competitiveness, global trade negotiations softened effective tariffs, financial conditions improved, and fiscal support persisted across multiple jurisdictions.
Yet at the IMF-World Bank Fall Meetings as reflected in the October WEO, the Fund warned of a global slowdown, dissipating temporary supports, and rising downside risks. The previous growth drivers appear to be fading. It called for stronger policy frameworks, sharper monetary-fiscal coherence, and even the strategic use of industrial policy to lift productivity. As always, the IMF emphasized institutions, reforms, and credibility. The emerging theme could not have captured it better: “Global economy in flux, prospects remain dim.”
As we wrote last week, while the world moves to strengthen individual countries’ domestic foundations, the Philippines remains mired in political upheaval, institutional fragility, and stalled development momentum. When global prospects dim, our vulnerabilities sharpen. Corruption has not only eroded trust, it has undermined our ability to prevent floods, light the streets, and deliver basic services. Unless the country identifies a decisive and legitimate path forward — one that is not a military junta — our growth trajectory risks bending even further downward.
This context framed discussions at last Tuesday’s 4th AMRO (ASEAN+3 Macroeconomic Research Office) meeting in Hong Kong, themed “Fragmentation to Resilience: Macro-financial Stability and Regional Integration in ASEAN+3.” Several messages from the forum strike painfully close to home — points we urgently need to confront as the country braces for the Nov. 30 Trillion Peso March. Before rebuilding the “infrastructure of governance,” we must first assert truth, justice, and public interest. Without these, the rest collapses.
First, resilience is not enough.
Global and regional narrative of “resilience” is very significant. Economies, including ASEAN+3, are praised for their capacity to withstand successive shocks. Yet the WEO itself shows that resilience often masks deeper weaknesses: long-term economic scarring from the pandemic, missed growth opportunities over the past three crises — the Asian Financial Crisis, the Global Financial Crisis, and Europe’s debt turmoil — and the persistence of poverty and inequality even in advanced economies. If this is the measure of resilience, then perhaps what we actually need is an economy flexible enough to fall and recover — rather than one that survives but stagnates.
An economy that endures but stagnates cannot reduce poverty, shrink inequality, or restore dynamism. Real resilience requires strong institutions, a productive real sector, and policies that adapt, not merely absorb.
Therefore, resilience, while necessary, is not sufficient. Persistent scarring may have pushed many economies — including ours — onto a lower growth path for the next five to 10 years. If resilience merely means a low but positive equilibrium, how do we meaningfully reduce poverty? Address inequality? Restore dynamism? The consensus is quite clear: real-sector strength, institutional credibility, and policy adaptability must work hand in hand.
Second, fiscal and monetary space is thinning.
Based on the discussions, we believe a rethink of fiscal support and monetary accommodation in the region is imperative. Many ASEAN+3 economies now operate with fiscal deficits exceeding 4% of GDP and debt ratios above 60% — conditions that can quickly become precarious. Fiscal space is shrinking. At the same time, monetary easing — even amid controlled inflation — may erode policy buffers needed to maintain financial stability.
In the Philippines, another rate cut risks widening the rate differential with the US, with potentially destabilizing effects on capital flows, the stock market, and the exchange rate. With unprecedented uncertainty, central banks must protect their independence to preserve their credibility and effectiveness. Credibility is not a luxury; it is the last line of defense.
Third, regional integration demands real capacity, not rhetoric.
Everybody talked about, emphasized and prescribed strengthening regional financial integration and safety nets as foundations for more durable growth. But there are real structural limits to a deeper regional integration. ASEAN’s intra-regional trade remains modest due to low trade complementarity and shallow value-chain linkages.
Regional integration cannot be deepened by declarations alone. The region must first upgrade development levels, production capabilities, and technology adoption. It must modernize institutions and strengthen the real sector that creates value. Deeper ASEAN integration will depend less on repeating familiar rhetoric — and more on building fundamentals that trade agreements and liberalization alone cannot deliver.
Taken together, these lessons point to one unavoidable conclusion: the Philippines must get real.
The world is reorganizing — strengthening institutions, modernizing industries, and preparing for a future shaped by uncertainty. Meanwhile, we are trapped in crises entirely of our own making. Corruption has hollowed out our ability to deliver basic services in education and health, from flood management to street lighting. It has weakened institutions that should protect the public interest. It has stolen from us the capacity to grow over the long haul. And it has jeopardized our capacity to turn external optimism into domestic progress.
Unless we confront corruption head-on, rebuild institutions, and restore credibility — political, fiscal, and economic — no amount of favorable global conditions or regional partnerships will save us.
Philippines, it’s time to get real.
Diwa C. Guinigundo is the former deputy governor for the Monetary and Economics Sector, the Bangko Sentral ng Pilipinas (BSP). He served the BSP for 41 years. In 2001-2003, he was alternate executive director at the International Monetary Fund in Washington, DC. He is the senior pastor of the Fullness of Christ International Ministries in Mandaluyong.