BSP warns of continuous BOP deficit in next two years

The Bangko Sentral ng Pilipinas (BSP) warned on Wednesday the country’s balance of payments (BOP) would remain in deficit over the next two years on sustained pressures on the current account.

The current account shortfall is expected to stay at around 3 percent of gross domestic product (GDP) in 2025 and 2026. This reflects a widening trade-in-goods gap, subdued services receipts and restrained capital inflows amid global uncertainty and shifting trade policies, the BSP said in a statement.

It said 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, it said. However, structural constraints, such as logistical inefficiencies, skills mismatches, and elevated input costs continue to weigh on export competitiveness, it added.

The BSP said it expects growth in services exports, particularly in business process outsourcing (BPO) and tourism, to moderate as the sector contends with uncertainties surrounding US reshoring policies and weakening inbound travel.

Overseas Filipino remittances are expected to remain a resilient source of external support, underpinned by strong global labor demand and sustained confidence in formal transfer channels, it said.

Foreign direct and portfolio investment inflows are also projected to soften from 2024, reflecting heightened global financial volatility and cautious investor behavior. However, recent policy reforms—including amendments to the Investors’ Lease Act—are poised to improve the investment climate, it said.

The gross international reserves (GIR) are expected to remain adequate, providing a robust buffer against external liquidity needs even as global market conditions evolve.

The BSP said it would continue to engage proactively with external stakeholders and uphold macroeconomic stability, closely monitoring emerging risks that impact the external sector.