PH BOP deficit to persist amid global trade risks

The Philippines’ balance of payments (BOP) is projected to remain in deficit through 2025 and 2026, as external challenges continue to pressure the country’s trade and investment flows, according to the Bangko Sentral ng Pilipinas (BSP).

The central bank expects the current account deficit to stay around 3.3 percent of gross domestic product (GDP) in 2025 and widen slightly to 2.9 percent in 2026, driven by a persistent gap in goods trade and weaker services income.

“The BOP is projected to remain in deficit over the next two years, driven by sustained pressures on the current account,” the BSP said in its October 2025 forecast update.

Weaker global demand, falling commodity prices, and tempered domestic economic momentum are seen to keep both exports and imports subdued over the forecast period.

Goods exports are expected to reach USD 55.6 billion in 2025 and grow modestly to USD 56.2 billion in 2026, while imports are forecast at USD 125.2 billion in 2025 and USD 126.4 billion in 2026.

The BSP noted that structural constraints such as logistical bottlenecks, skills mismatches, and high production costs continue to erode export competitiveness.

Services exports are projected to grow at a slower pace due to uncertainty surrounding U.S. reshoring efforts and lower inbound tourism.

In 2025, services exports are expected to reach USD 52.6 billion — down from earlier estimates — and rebound to USD 55.2 billion in 2026.

Despite this, business process outsourcing (BPO) revenues are expected to maintain stable growth at 5.0 percent annually, rising from USD 33.5 billion in 2025 to USD 35.2 billion in 2026.

Travel receipts, which are part of services exports, are projected to recover to USD 9.4 billion in 2025 and USD 9.7 billion in 2026, though growth will likely moderate amid global travel uncertainties.

Cash remittances from overseas Filipino workers are forecast to remain a steady source of foreign currency, reaching USD 35.5 billion in 2025 and USD 36.6 billion in 2026.

“Overseas Filipino remittances are expected to remain a resilient source of external support, underpinned by strong global labor demand,” the BSP noted, even as it acknowledged the potential impact of a forthcoming U.S. tax on remittances.

On the capital side, net foreign direct investment (FDI) inflows are forecast to decline to USD 7.5 billion in 2025 but are expected to rebound slightly to USD 8.0 billion in 2026.

Portfolio investment (FPI) inflows are also seen to taper, with net inflows of USD 6.2 billion in 2025 and USD 5.0 billion in 2026 amid volatile global financial markets.

“Foreign direct and portfolio investment inflows are likewise projected to soften from 2024, reflecting heightened global financial volatility and cautious investor behavior,” the BSP stated.

The overall BOP position is forecast to post a deficit of USD 6.9 billion in 2025 and USD 3.4 billion in 2026, equivalent to 1.4 percent and 0.6 percent of GDP, respectively.

Despite these external imbalances, the country’s gross international reserves are projected to remain stable at around USD 105.0 billion in 2025 and USD 106.0 billion in 2026.

The BSP emphasized that it will continue to engage with stakeholders to uphold macroeconomic stability and respond proactively to emerging external risks.

“Infrastructure investments, trade diversification, and recent reforms — such as amendments to the Investors’ Lease Act — may help cushion external shocks and improve the investment climate,” the central bank added.