Manila: The country’s balance of payments (BOP) is projected to remain in deficit in the next two years due to global headwinds, the Bangko Sentral ng Pilipinas (BSP) said.
According to Philippines News Agency, the BOP is a summary of the economic transactions of a country with the rest of the world for a specific period. The overall position can be in surplus, deficit, or balance. In a statement on Wednesday, the BSP said the BOP is expected to register a deficit of USD6.9 billion this year, bigger than the earlier USD6.3 billion deficit projection. For 2026, the BSP also revised upward its deficit forecast to USD3.4 billion from USD2.8 billion.
“The Balance of Payments (BOP) is projected to remain in deficit over the next two years, driven by sustained pressures on the current account,” said the BSP. The current account shortfall is expected to stay at around 3 percent of the country’s gross domestic product (GDP) in 2025 and 2026, reflecting a widening trade-in-goods gap, subdued services receipts, and restrained capital inflows amid global uncertainty and shifting trade policies.
The BSP projects the current account shortfall to reach USD16.4 billion this year. For next year, the current account shortfall is projected to reach USD15.5 billion. Goods export is forecast to grow by 1 percent to USD55.6 billion this year, a turnaround from the -1 percent earlier projection. For next year, exports are projected to grow at a slower pace of 1 percent from the 2 percent earlier forecast.
“Goods exports and imports are anticipated to remain sluggish, shaped by softening global demand, easing commodity prices, and tempered domestic growth momentum. Infrastructure investments, potential trade diversion, and efforts to diversify export and import partners may help cushion external shocks. However, structural constraints, such as logistical inefficiencies, skills mismatches, and elevated input costs, continue to weigh on export competitiveness,” said the BSP.
Imports, on the other hand, are forecast to grow by 1 percent in 2025 and 2026. The BSP said services exports would likely grow by 2 percent this year, slower than the 6 percent earlier estimate, as the sector contends with uncertainties surrounding US reshoring policies and weakening inbound travel.
Overseas Filipino remittances, however, are projected to remain resilient, growing by 3 percent this year and next year, supported by strong global labor demand and sustained confidence in formal transfer channels, despite the impending US tax on remittances. Foreign direct and portfolio investment inflows are likewise projected to soften from 2024, reflecting heightened global financial volatility and cautious investor behavior.
The BSP, however, said that recent policy reforms, including amendments to the Investors’ Lease Act, are poised to improve the investment climate in the country. Gross international reserves are expected to remain adequate at USD105 billion this year and USD106 billion in 2026, providing a robust buffer against external liquidity needs.
“The Bangko Sentral ng Pilipinas will continue to engage proactively with external stakeholders and uphold macroeconomic stability, closely monitoring emerging risks that impact the external sector,” the BSP said.