By Justine Irish D. Tabile, Senior Reporter
THE Philippines’ balance of payments (BoP) deficit widened in March, driven by the elevated trade gap and heightened geopolitical uncertainty, Bangko Sentral ng Pilipinas (BSP) data showed on Monday.
The country’s BoP position stood at a $2.637-billion deficit last month, ballooning from the $1.966-billion gap in the identical month in 2025 and the $2.277-billion gap in February.
March marked the fifth straight month that the country’s BoP position was in a deficit. It was the most important BoP deficit in 14 months or because the $4.078-billion gap recorded in January 2025.
This brought the three-month BoP deficit to $5.288 billion from the $2.958-billion gap a yr ago.
The BoP refers back to the country’s economic transactions with other nations. A surplus indicates more funds entered the country, while a deficit shows that the country spent greater than it received.
“The broader BoP deficit is basically a function of a still-elevated trade gap — imports holding up on strong domestic demand — now compounded by higher oil prices and tighter global liquidity,” said Robert Dan J. Roces, group economist at SM Investments Corp. (SMIC), in a Viber message.
“Elevated US rates are dampening portfolio inflows, while geopolitical risks are pushing up the import bill and risk premia,” he added.
Preliminary data from the Philippine Statistics Authority (PSA) showed that the trade-in-goods deficit widened to $3.68 billion in February from $2.99 billion a yr earlier. The PSA is scheduled to release March trade data on May 30.
Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes said the BoP deficit widened since the country is paying more for imports, especially oil, while export and investment inflows are usually not growing fast enough.
“Global aspects are mutually reinforcing. Oil prices widen the trade deficit. US rates reduce capital inflows. Geopolitics amplify each. Global slowdown weakens exports,” he said in a Facebook Messenger chat.
“So, when these aspects move in the identical direction, they create a compounded effect, making the BoP deficit widen more sharply than any single factor would cause by itself,” he added.
Rising oil prices and dwindling fuel reserves pushed the federal government to announce a one-year state of national energy emergency and suspend excise taxes on kerosene and liquefied petroleum gas.
SMIC’s Mr. Roces said the BoP position is very unlikely to return to a surplus this yr.
“The more realistic path is a narrower but manageable deficit, with improvement hinging on lower oil prices, easing global rates, and regular inflows from remittances, business process outsourcing, and foreign direct investments,” he said.
“Importantly, a deficit at this stage just isn’t a red flag — it reflects an economy investing and expanding, with import demand tied to growth and capacity-building and stays sustainable so long as core inflows and reserves stay intact,” he added.
Mr. Peña-Reyes said that it is feasible to see the BoP position to swing to a surplus, nevertheless it just isn’t the bottom case.
“Most official and market forecasts still point to a small BoP deficit in 2026, though with scope for improvement versus 2025 relatively than a clean return to surplus,” he said.
“All told, the expected path is a narrowing deficit, not a full swing back into surplus,” he added.
For this yr, the central bank expects the BoP position to finish at a deficit of $7.8 billion or -1.5% of the country’s gross domestic product.
Last yr, the BoP deficit stood at $5.661 billion, a reversal of the $609-million surplus recorded in 2024.
RESERVES
Meanwhile, the Philippines’ gross international reserves (GIR) declined to $106.6 billion as of end-March from $107.51 billion reported earlier by the central bank. It was also lower than the $113.26-billion GIR at the top of February.
“This level of reserves stays an adequate external liquidity buffer, akin to 7.0 months’ price of imports of products and payments of services and first income,” the BSP said.
It also covers around 3.9 times the country’s short-term external debt based on residual maturity, it added.
GIR comprises foreign-denominated securities, foreign exchange, and other assets reminiscent of gold. It enables a rustic to finance imports and foreign debts, maintain the steadiness of its currency, and safeguard itself against global economic disruptions.
The BSP projects the Philippines’ dollar reserves to hit $111 billion by yearend.