THE International Monetary Fund (IMF) on Monday reduced its growth forecast for the Philippines for 2022 and 2023 due to the economic slowdown and other financial factors.

In a press briefing, the IMF said it is projecting the country’s gross domestic product (GDP) growth for 2022 to be at 6.5 percent, weaker than its previous forecast of 6.7 percent.

It added that the projected growth for next year is at 5 percent, down from 6.3 percent.

According to the IMF, the significant downward reduction in 2023 was related to the monetary policy tightening carried out by the Bangko Sentral ng Pilipinas (BSP) this year.

IMF mission head Cheng Hoon Lim said the growth outlook of the Philippines is subject to significant downside risks where policy tradeoffs between output and inflation would become “more acute.”

Lim said the downside risks include a surge in Covid-19 cases from more severe variants, a more abrupt or larger-than-expected tightening of global financial conditions, a deepening of the global slowdown, persistently high domestic inflation and natural disasters.

On the upside, an end to Russia’s war in Ukraine and taming of inflation both domestically and globally could lay the foundations for stronger growth than currently envisaged.

Lim said the BSP’s “near-term tightening” was “appropriate.”

However, the IMF lauded the Philippines for successfully emerging from one of the world’s strictest pandemic lockdowns.

The international lender attributed the success to sustained reforms and disciplined macroeconomic policies that contained financial vulnerabilities and mitigated the hardships faced by the poor.

Lim added that the Philippine economy rebounded in late 2021.

“[The Philippine economy] accelerated further in the first half of 2022, spurred by strong domestic demand and private investment,” said Lim.

“Looking ahead, sustaining the economic recovery will require a focus on policies to address inflationary risks, increase fiscal and financial resilience to adverse shocks, and successful implementation of reforms to mitigate pandemic scarring and raise productivity growth,” said Lim.