The Philippines’ balance of payments is projected to shift from a modest surplus in 2024 to deficits in 2025 and 2026 as a sustained trade-in-goods gap and weaker services receipts weigh on the economy.
The reversal in the overall balance, which summarizes all economic and financial transactions between the Philippines and the rest of the world, reflects a deepening current account shortfall, according to the Bangko Sentral ng Pilipinas (BSP).
It expects the BOP to incur a deficit of $6.2 billion representing 1.3 percent of the gross domestic product (GDP) by end-2025 and $5.9 billion or 1.2 percent of GDP by end-2026.
The current account is projected to yield a deficit of $15.5 billion or 3.2 percent of GDP by end-2025 and $15.3 billion or 3.0 percent of GDP by end-2026.
BSP officials noted that foreign direct investments and external loans have also moderated amid lingering global policy uncertainty.
Goods trade is expected to remain soft due to weaker global demand, easing commodity prices and slower domestic growth, the BSP said in a statement.
It said that while a temporary boost to merchandise exports occurred in the first half of 2025 as traders frontloaded shipments in anticipation of US tariffs, structural constraints continue to hinder competitiveness. Logistical bottlenecks, skills mismatches and high input costs remain primary hurdles for local exporters.
Growth in services exports is also projected to moderate. High costs for rental fees, utilities and wages have made the business process outsourcing sector less competitive compared to regional peers, while the tourism industry faces similar pressure from rising prices for meals and accommodation.
Overseas Filipino remittances are expected to remain a bright spot, supported by strong global labor demand and the use of formal transfer channels. Authorities expect an impending US tax on remittances to have a minimal impact on these flows.
Foreign direct investments are forecast to ease from 2024 levels, reflecting cautious market sentiment and heightened financial volatility.
The government expects modest medium-term gains from the implementation of the CREATE MORE law, the Capital Markets Efficiency Promotion Act and the Konektadong Pinoy Act.
Despite the projected deficits, the BSP said that gross international reserves remain adequate. Early warning systems for currency crises and debt sustainability indicate the Philippines remains resilient to external shocks as of the fourth quarter of 2025. Manageable external financing needs and ample reserves continue to provide a buffer against liquidity risks.
Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said the bank would continue to promote macroeconomic stability and monitor emerging risks that impact the external sector.
