PH BOP position seen to post deficits in 2025, 2026

The Philippine balance of payments (BOP) position is expected to post deficits this year and the next amid external challenges such as the global trade uncertainty, heightened geopolitical risks, and weakened investor confidence, the Bangko Sentral ng Pilipinas (BSP) said Monday.

According to the central bank, the BOP is expected to post a $6.3-billion deficit in 2025 or 1.3% of the gross domestic product (GDP), and a $2.8-billion deficit or 0.5% of the GDP in 2026.

This compares with the $0.6-billion surplus recorded in 2024, which translated to 0.1% of the GDP.

The payments position takes into account Philippine transactions with the rest of the world during a specific period. A surplus means more funds entered the country, while a deficit means more funds exited.

“This outlook reflects a continued current account shortfall and moderating financial flows,” the BSP said in a statement on Monday.

“While the domestic economy benefits from steady growth, low inflation, and ongoing structural reforms, these are offset by global trade uncertainty, heightened geopolitical risks, and weakened investor confidence,” it added.

The Philippine economy expanded by 5.4% in the first quarter of the year, with the country’s economic managers targeting growth between 5.5% to 6.5% this year, and expecting inflation to clock an average between 2.0% to 3.0%.

The current account — which tracks the flow of goods, investment earnings, and foreign aid — is expected to post a $16.3-billion deficit or 3.3% of the GDP this year, and $13.6 billion or 2.5% of GDP in 2026.

“As a result, external financing remains necessary to support the country’s infrastructure-led, investment-driven growth strategy,” the BSP said.

The BSP also cited the impact of global trade uncertainty on goods exports, while the import value is tempered by declining global commodity prices, specifically for oil. It also noted downside risks on services trade such as uncertainties due to the job reshoring initiatives in the United States.

It noted, however, that steady remittance flows continue to provide a buffer against the trade deficit. Latest data show that cash remittances fell to an 11-month low of $2.664 billion in April.

“The moderation in trade and investment flows limits the country’s scope to build up foreign exchange reserves. Nonetheless, reserves are expected to remain ample, providing sufficient liquidity to cushion the economy against external headwinds,” the BSP said.

“The BSP emphasizes the limitations of the forecasts, given the evolving external landscape. The BSP will continue to monitor external developments and risks, and their potential impact on the fulfillment of its objectives for price and financial stability,” it added. —AOL, GMA Integrated News