BOP deficit widens to USD 5.3B in Q1

The Philippines’ balance of payments deficit widened in the first quarter of 2026 as external debt repayments, weaker foreign direct investment and higher import costs weighed on the country’s external position.

The country’s BOP registered a deficit of USD 5.3 billion in Q1 2026, equivalent to 4.5 percent of gross domestic product.

The latest figure was wider than the USD 3.0 billion deficit recorded in Q1 2025, which was equivalent to 2.6 percent of GDP.

The BOP summarizes the country’s economic transactions with the rest of the world, covering the current account, capital account and financial account, according to the Bangko Sentral ng Pilipinas.

The latest BOP position reflected weaker financial inflows, mainly due to external debt repayments and subdued FDI.

Higher import costs also widened the current account deficit.

The decline in financial account net inflows was driven mainly by lower net inflows in other investments.

Banks repaid their foreign loans during the period, while nonresidents withdrew their currency and deposits from local banks.

Direct investments continued to post net inflows but moderated amid cautious investor sentiment.

Net portfolio investment outflows also eased as residents reduced their investments in foreign debt securities.

The easing was partly offset by foreign investors’ withdrawals from Philippine debt securities.

The current account deficit widened due to a larger trade in goods deficit. The deficit was also affected by softer dividend inflows and reduced interest earnings from direct investments and reserve assets.

The trade in services surplus narrowed as services payments grew faster than services receipts.

The increase in services payments was driven mainly by technical, trade-related and other business services, as well as travel-related expenditures.

Exports of goods recorded robust growth, supported by sustained global demand for electronics.

However, export gains were outweighed by high import payments, mainly due to price increases in key commodities.

The services sector continued to support the external accounts through solid revenues from tourism, manufacturing services and business process outsourcing.

Remittances from overseas Filipinos also remained resilient, helping cushion external pressures and providing a stable source of financing.

The BSP earlier said the country’s BOP and current account were expected to remain under pressure in 2026 and 2027 because of trade, services and income dynamics.

The wider Q1 deficit underscores the sensitivity of the Philippines’ external position to global commodity prices, investor sentiment and debt-related outflows.