BSP sees USD 9.2 billion payments deficit in 2026
MANILA — The Bangko Sentral ng Pilipinas (BSP) expects a USD 9.2 billion Philippine balance of payments deficit in 2026, narrowing to USD 8.5 billion in 2027. Expensive fuel and commodities will continue to weigh on external accounts.
For households and businesses, the pressure comes through higher fuel, transport, and import costs, while slower domestic activity limits spending. The BSP expects remittances and services earnings to soften the pressure, but not fully offset the trade-driven shortfall.
The forecasts, released Oct. 13, put the overall deficit at 1.8% of gross domestic product (GDP) in 2026 and 1.6% in 2027.
Both estimates improved from the second-quarter projections of USD 10.7 billion for 2026 and USD 11 billion for 2027, each equivalent to 2.1% of GDP.
The Monetary Board approved the latest forecasts on Oct. 2, updating projections approved June 25.
The balance of payments records transactions between Philippine residents and the rest of the world. An overall deficit indicates that external outflows exceed inflows under the BSP’s presentation.
The BSP attributed the projected deficits to subdued global growth, geopolitical tensions, and elevated fuel and transport costs.
The current account deficit is forecast at USD 19.1 billion, or 3.8% of GDP, in 2026, worsening from the previous estimate of USD 18 billion, or 3.6%.
For 2027, the BSP expects a broadly stable current account shortfall of USD 19.4 billion, or 3.6% of GDP, compared with its earlier forecast of USD 19.7 billion, or 3.7%.
The current account includes trade in goods and services, income flows, and transfers, including remittances.
The combined goods and services trade deficit is projected at USD 58.6 billion in 2026 and USD 60.3 billion in 2027, equivalent to 11.7% and 11.1% of GDP, respectively.
The BSP expects goods imports to grow 7% to USD 139.7 billion in 2026, before growth slows to 3% and imports reach USD 143.9 billion in 2027.
Import growth is expected to ease in the second half of 2026 as firms and households adjust to slower domestic activity and high inflation.
Goods exports, led by electronics, are forecast to rise 6% to USD 67.2 billion in 2026 and 4% to USD 69.9 billion in 2027, although uneven global demand could restrain their momentum.
Services exports are projected to grow 4% in each year, reaching USD 53.6 billion in 2026 and USD 55.7 billion in 2027.
These include travel receipts of USD 9.2 billion and USD 9.6 billion, respectively, with 5% annual growth in both years.
Business process outsourcing revenues are forecast to increase 3% annually to USD 34.5 billion in 2026 and USD 35.5 billion in 2027.
Services imports are projected at USD 39.6 billion in 2026, up 4%, and USD 42 billion in 2027, up 6%.
Within those totals, travel imports are forecast to rise 7% to USD 16.1 billion in 2026 and 9% to USD 17.6 billion in 2027.
Cash remittances are expected to grow 2.7% to USD 36.6 billion in 2026 and 3% to USD 37.7 billion in 2027, unchanged from the previous forecasts.
The BSP projects net financial inflows of USD 11.4 billion in 2026 and USD 11.8 billion in 2027, providing partial financing for the current account deficits.
Foreign borrowing by the national government, corporations, and banks is expected to drive other investment inflows, while direct investment remains positive but modest and portfolio flows remain sensitive to global financial conditions.
The forecast for net foreign direct investment liabilities was lowered to USD 6.5 billion for 2026 and USD 7 billion for 2027, from USD 7 billion and USD 8 billion, respectively.
Net foreign portfolio investment liabilities are projected at USD 1.8 billion in 2026, unchanged, and USD 3 billion in 2027, down from USD 3.3 billion.
Gross international reserves are forecast at USD 104 billion in 2026 and USD 105 billion in 2027, unchanged from the earlier projections and above USD 100 billion in both years.
The BSP said reserves, services exports, and remittances would help the economy adjust to external pressures. Reserves provide foreign currency resources that can help meet import and foreign debt payments during disruptions.
The BSP cautioned that limitations in data compilation methods and data quality create considerable uncertainty around the forecasts.
Actual results may differ materially from the projections.
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