By Luisa Maria Jacinta C. Jocson, Reporter
THE BANGKO SENTRAL ng Pilipinas (BSP) expects the country’s balance of payment (BoP) position to swing to a deficit this 12 months, in addition to post a wider current account deficit, largely as a consequence of global trade volatilities.
“The Philippine BoP position is projected to be weaker in 2025-2026 as a consequence of slower global trade and subdued investor confidence linked to increased uncertainty in global trade policy and geopolitical developments,” it said in a press release late on Monday.
“The outlook nevertheless reflects sustained expansion within the domestic economy, supported by easing inflation and fewer restrictive monetary policy.”
The central bank’s latest projection shows the general BoP will register a deficit of $4 billion this 12 months, akin to -0.8% of gross domestic product (GDP).
This can be a reversal from its earlier forecast of a $2.1-billion surplus (0.4% of GDP) for 2025.
In 2024, the BoP position stood at a surplus of $609 million, plunging by 83.4% from the $3.672-billion surplus at end-2023.
The BoP provides a glimpse of the country’s transactions with the remaining of the world. A deficit indicates that more funds exited the economy while a surplus shows more cash entered than left.
The BoP deficit is predicted to widen to $4.3 billion next 12 months but still at -0.8% of GDP.
“For 2026, the general BoP is anticipated to stay in deficit, consistent with the expected widening of the present account deficit relative to the 2025 forecast,” the BSP said.
The central bank said sustained financial account net inflows will support the BoP outlook next 12 months, but cited persisting downside risks, reminiscent of trade uncertainties, weak global growth and geopolitical tensions.
“The general BoP position is predicted to indicate a deficit in 2025 and in 2026, with a wider current account gap resulting from a better trade-in-goods deficit and lower net receipts in trade-in-services,” the BSP said.
Meanwhile, the present account deficit — which covers transactions involving goods, services, and income — is predicted to succeed in $19.8 billion this 12 months, akin to -3.9% of economic output.
That is wider than its earlier forecast of a $12.1-billion current account deficit (-2.4% of GDP).
For 2026, the present account deficit is projected to hit $21.2 billion (-3.9% of GDP).
Latest data from the BSP showed the present account deficit widened by 41.4% to $17.5 billion last 12 months from $12.39 billion in 2023.
This also marked the second-largest current account deficit on record, after the $18.3-billion gap recorded in 2022.
MODEST EXPORTS GROWTH
Meanwhile, the BSP lowered its goods exports growth forecast to 1% this 12 months from 4% previously. It expects goods exports to expand by 2% next 12 months.
“Merchandise exports are anticipated to record modest growth in 2025 and 2026 after two consecutive years of decline in 2023 and 2024.”
“Semiconductor exports will see flat growth in 2025, attributed largely to the continued inventory correction and because the industry works to maintain pace with the rapidly evolving global demand.”
The BSP also trimmed its growth projection for goods imports to 4% from 5% earlier. Goods imports are seen to grow by 4% in 2026.
Service exports’ growth was also slashed to eight% from 10% previously. The BSP expects service exports to grow by 8% next 12 months.
It said that service exports are seen to register a “modest expansion” amid weaker business process outsourcing (BPO) services.
“The outlook for BPO services incorporates the adversarial impact of the US job reshoring agenda, in addition to the domestic challenges in the availability of expert staff in Generative AI and data analytics.”
This might “hamper industry efforts to climb up the worth chain and maintain competitiveness,” it added.
BPO revenues are seen to grow by 5% this 12 months and in 2026. This was a tad slower than the previous forecast of 6% for 2025.
Travel receipts are projected to expand by 11% this 12 months, much slower than its previous forecast of 20%.
“Growth in Philippine tourism activity is predicted to return to its pre-pandemic trend supported by the continued influx of international tourists, particularly from Korea and Japan,” it added.
However, the BSP anticipates service imports growth to speed up to 14% this 12 months from 8% previously. Its 2026 growth forecast is at 12%.
“Overseas Filipino (OF) remittances are expected to grow barely below the long-term trend as major OF host economies, reminiscent of Saudi Arabia and Qatar, increasingly advocate for the localization of their workforce, affecting OFWs’ (overseas Filipino staff) deployment prospects,” it said.
The central bank also trimmed its money remittance growth projection to 2.8% this 12 months from 3% earlier. Money remittances are expected to grow by 3% next 12 months.
Nevertheless, the US’ harsher immigration policies are seen to have a minimal effect on remittance flows, the central bank said.
“Most US-based Filipinos are composed of everlasting residents and documented migrants and fewer than 1% of total land-based OFWs are deployed within the US.”
Meanwhile, the BSP said the financial account shall be “buoyed by sustained net inflows from each foreign direct and portfolio investments.”
“Investor interest shall be supported by the country’s macroeconomic fundamentals, together with ongoing reforms to reinforce the convenience of doing business, optimize tax incentives, and improve capital market efficiency.”
Financial account outflows could reach $16.2 billion this 12 months and $17.8 billion in 2026.
The financial account records transactions between residents and nonresidents involving financial assets and liabilities.
The country’s exit from the Financial Motion Task Force “gray list” can even boost investor confidence, the BSP said.
“Investment gains, nevertheless, could also be tempered by a pause in US monetary policy easing, which might limit capital flows to emerging market economies, including the Philippines,” it added.
The BSP also cut its forecast for foreign direct investment inflows to $9 billion in 2025 from $10 billion previously.
However, the web foreign portfolio investment projection was raised to $3.9 billion from $3.1 billion.
“The country’s gross international reserves (GIR) level is projected to say no barely in 2025 and 2026 compared with 2024, reflecting reduced foreign exchange inflows from the exports of products and services, in addition to investments.”
The GIR is forecast to succeed in $105 billion for this 12 months, lower than the $110 billion it projected earlier.
Rizal Industrial Banking Corp. Chief Economist Michael L. Ricafort said that the weaker BoP outlook was as a consequence of US President Donald J. Trump’s tariff policies, which could dampen global growth, investments and trade.
“Consequently of all of those, Philippine exports could decelerate amid slower global trade and will widen the country’s trade deficit and, in turn, the present account deficit,” he said.
Mr. Ricafort said foreign direct investments could slow as a consequence of Mr. Trump’s “America first” policies, while foreign portfolio investments could possibly be affected by increased volatility in markets.
“Softer world GDP could also decelerate growth in BPO and other services export revenues, in addition to decelerate foreign tourism revenues,” he added.
OUTLOOK
Meanwhile, the BSP said domestic growth prospects could “provide a cushion against global headwinds.”
“Domestic expansion driven by private consumption, investments, including government infrastructure spending, in addition to continued progress on legislative reforms to enhance the business environment should encourage foreign investments and positively impact the external sector outlook within the near to medium term.”
The federal government expects growth to range between 6% and eight% this 12 months and in 2026.
The BSP earlier said it expects GDP to settle near the lower sure of the goal range from this 12 months to the subsequent.
The central bank said global economic growth is seen to stay soft from this 12 months to the subsequent amid the US’ uncertain trade policies.
“Global growth prospects are expected to be further dampened by several aspects, including the continued weakness within the Chinese economy, prolonged geopolitical tensions in conflict zones of the Middle East and Eastern Europe, and commodity price volatility.”
