PH payments position seen to shift to deficits in 2025, 2026 — BSP

The Philippines’ balance of payments (BOP) position is expected to reverse to deficits in 2025 and 2026 from a surplus seen in 2024 amid persistent global uncertainties, the Bangko Sentral ng Pilipinas (BSP) said Friday.

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.

According to the BSP, the BOP is expected to stand at a deficit of $6.2 billion or 1.3% of gross domestic product (GDP) in 2025 and at a $5.9-billion shortfall or 1.2% of GDP in 2026.

The project BOP position this year and next were reversals from a surplus of $600 million in 2024.

“This reversal largely reflects a continued current account shortfall arising from a sustained trade-in-goods gap and weaker services receipts. Foreign direct investments and external loans have also moderated amid lingering global policy uncertainty,” the BSP said.

The central bank added that goods trade is expected to remain soft, “shaped by weaker global demand, easing commodity prices, and slower domestic growth momentum.”

The BSP said that export growth is projected to moderate due to higher costs relative to competitors in both the business process outsourcing (BPO) —in terms of rental fees, utilities, and wages— and tourism —in terms of meals and accommodation— sectors. 

“Meanwhile, overseas Filipino (OF) remittances are expected to remain resilient, supported by strong global labor demand and the sustained use of formal transfer channels, with the impending US tax on remittances expected to pose minimal impact,” the central bank said.

The BSP said foreign direct investments are also expected to ease from 2024, “reflecting cautious market sentiment and heightened global financial volatility.”

“Modest gains may be expected over the medium term with the passage of the CREATE MORE law, the Capital Markets Efficiency Promotion Act (CMEPA), the Investors’ Lease Act, Enhanced Fiscal Regime for Large-Scale Metallic Mining Act and new initiatives on digital connectivity (e.g., Konektadong Pinoy Act),” it said.

“This underscores the importance for the national government to implement these laws in a timely and effective manner,” it added.

Nevertheless, the BSP said gross international reserves are projected to remain adequate at $109 billion and $110 billion in 2025 and 2026, respectively, “providing a strong buffer against external liquidity risks.”

“The Bangko Sentral ng Pilipinas will continue to engage proactively with external stakeholders and promote macroeconomic stability, closely monitoring emerging risks that impact the external sector,” the central bank said. — RSJ, GMA Integrated News