BSP sees wider BOP deficit

Amid global economic uncertainty

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has revised its balance of payments (BOP) forecast this year amid heightened global economic uncertainty, weaker trade growth and subdued investor confidence.

As of the first quarter, the overall BOP is expected to shift to a deficit of $4 billion this year, a reversal of the $2.1-billion surplus forecasted a quarter ago and a significant drop from the $609 million actual surplus in 2024.

“The Philippine BOP position is projected to be weaker in 2025 to 2026 due to slower global trade and subdued investor confidence linked to increased uncertainty in global trade policy and geopolitical developments,” the central bank said.

The current account deficit is now expected to widen to $19.8 billion or 3.9 percent of gross domestic product this year, a downgrade from the previously projected $12.1 billion deficit and significantly higher than the $17.5 billion shortfall in 2024.

This reflects a higher trade-in-goods deficit. Goods export growth is projected to reach one percent this year, down from four percent a quarter prior. Imports are forecasted to grow by four percent in 2025, down from five percent.

Services exports are seen to post a modest expansion given slower growth in business process outsourcing services. The BPO industry, a major driver of services exports, is expected to post lower growth at eight percent, to reach $56.1 billion revenues this year.

The BSP said the industry faces challenges from the US job reshoring agenda as well as domestic talent shortages in AI and data analytics.

Travel receipts may also reach $10.8 billion this year, lower than the previous estimate of $12.6 billion.

However, this is still higher than the actual $9.7 billion in 2024 due to stronger international arrivals, particularly from South Korea and Japan.

Remittances are now expected to grow by 2.8 percent this year, down from three percent previously.

The BSP said that major host countries like Saudi Arabia and Qatar are increasingly pushing for workforce localization, which could dampen long-term remittance inflows.

The BSP also sees net foreign direct investment liabilities going down to $9 billion from the previous quarter’s projection of $10 billion.

Meanwhile, foreign portfolio investment liabilities are revised upward to $3.9 billion, reflecting investor optimism following the Philippines’ exit from the Financial Action Task Force gray list.

The country’s gross international reserves (GIR) are projected to decline to $105 billion in 2025 and 2026, a downward adjustment from the $110 billion forecast a quarter ago.

Looking ahead to 2026, the BSP expects the overall BOP to remain in deficit, with the current account shortfall likely to widen further from 2025 levels.

“Sustained net inflows from the financial account are anticipated to provide support to the BOP outlook. Nonetheless, significant downside risks persist, including uncertainty from US trade and investment policies, weaker global activity and world trade, as well as ongoing geopolitical and trade tensions,” the BSP said.

The BOP position is expected to post a deficit of $4.3 billion next year or 0.8 percent of GDP, while the current account shortfall is projected to reach $21.2 billion or 3.9 percent of GDP.