The Bangko Sentral ng Pilipinas (BSP) on Tuesday lowered its balance of payments (BOP) forecasts for 2025 and 2026, citing slower global trade and subdued investor confidence due to increased uncertainty in global trade policy and geopolitical developments.
The BSP now expects the overall BOP position to show a deficit of $4 billion in 2025 and $4.3 billion in 2026, with a wider current account gap resulting from a higher trade-in-goods deficit and lower net receipts in trade-in-services.
It said the current account is expected to show a deficit of $19.8 billion in 2025 and $21.2 billion in 2026.
“Global economic growth is expected to remain soft in 2025 and 2026, as economies contend with U.S. trade policy changes and responses from trading partners,” the BSP said in a statement.
It also cited the weakness in the Chinese economy, prolonged geopolitical tensions in the Middle East and Eastern Europe and commodity price volatility as factors dampening global growth prospects.
Merchandise exports are anticipated to record modest growth in 2025 and 2026 after two consecutive years of decline, with semiconductor exports expected to see flat growth. Services exports are also seen to post a modest expansion, with business process outsourcing (BPO) growth slowing.
The BSP noted that the outlook for BPO services incorporates the adverse impact of the U.S. job reshoring agenda, as well as domestic challenges in the supply of skilled workers in generative AI and data analytics.
Overseas Filipino (OF) remittances are expected to grow slightly below the long-term trend as major host economies, such as Saudi Arabia and Qatar, increasingly advocate for the localization of their workforce.
The financial account will be buoyed by sustained net inflows from both foreign direct and portfolio investments, supported by the country’s macroeconomic fundamentals and ongoing reforms. The Philippines’ exit from the Financial Action Task Force (FATF) grey list is also expected to contribute to investor confidence.
However, investment gains may be tempered by a pause in U.S. monetary policy easing, which would limit capital flows to emerging market economies, including the Philippines.
The country’s gross international reserves (GIR) level is projected to decline slightly to $105 billion in 2025 and 2026 compared with 2024, reflecting reduced foreign exchange inflows.
The BSP said it would continue to monitor closely emerging external sector developments and risks and how these may impact its price and financial stability objectives.