Philippines’ Balance of Payments Shifts to Deficit in Q4
The Philippines recorded a balance of payments (BOP) deficit of $4.5 billion in the fourth quarter of 2024, reversing from a $1.9 billion surplus in the same period in 2023, according to the Bangko Sentral ng Pilipinas (BSP). The BOP tracks all financial transactions between the country and the rest of the world, including trade,

By Staff Writer
The Philippines recorded a balance of payments (BOP) deficit of $4.5 billion in the fourth quarter of 2024, reversing from a $1.9 billion surplus in the same period in 2023, according to the Bangko Sentral ng Pilipinas (BSP).
The BOP tracks all financial transactions between the country and the rest of the world, including trade, investments, and remittances. A deficit means the country spent more on foreign transactions than it earned, which can put pressure on the peso.
The shift to a deficit was primarily due to a wider current account shortfall and net financial outflows.
Current Account Deficit Widens
The current account, which includes trade in goods and services, as well as income from overseas investments, posted a deficit of $4.6 billion in Q4 2024, equivalent to 3.5% of gross domestic product (GDP).
This was a sharp increase of 339.3% from the $1 billion deficit recorded in Q4 2023. The larger deficit was caused by a growing trade gap and lower earnings from services and primary income, which includes dividends and wages from abroad.
The capital account, which tracks transactions such as foreign aid and infrastructure grants, recorded net receipts of $19 million, a slight decrease from $22 million in Q4 2023.
Financial Account Reverses to Net Outflows
The financial account, which measures cross-border investments and loans, posted net outflows of $2.9 billion in Q4 2024, reversing from net inflows of $6.2 billion in Q4 2023.
This means more money left the country than entered, largely due to portfolio investments and other investments shifting from inflows to outflows. However, foreign direct investments continued to flow into the country, partly offsetting the capital flight.
Full-Year 2024: BOP Remains in Surplus but Declines
Despite the Q4 deficit, the Philippines still posted a BOP surplus of $609 million for the full year 2024. However, this was significantly lower than the $3.7 billion surplus recorded in 2023.
The decline was mainly due to a wider current account deficit, which reached $17.5 billion, or 3.8% of GDP, in 2024. This was a 41.4% increase from the $12.4 billion deficit in 2023.
Higher trade deficits and lower earnings from services contributed to the current account shortfall. However, this was partially offset by increased earnings from primary and secondary income, which include remittances from overseas Filipino workers (OFWs).
The financial account, on the other hand, posted net inflows of $17.6 billion in 2024, up 29.6% from $13.6 billion in 2023. This was driven by a shift in portfolio investments, with foreign investors returning to Philippine assets.
Foreign Reserves and Peso Performance
The country’s gross international reserves (GIR) stood at $106.3 billion as of December 2024, up from $103.8 billion in December 2023.
Foreign reserves serve as a financial buffer to stabilize the peso and pay for imports, debt, and other obligations. A higher GIR indicates the country has enough foreign currency reserves to meet its external obligations.
The peso depreciated in 2024, averaging PHP 57.29 per US dollar, compared to PHP 55.63 in 2023. In Q4 2024, the peso averaged PHP 58.15 per US dollar, weakening by 1.5% from the previous quarter and 3.6% year-on-year.
Economic Outlook
The BOP deficit in Q4 reflects external challenges, including global economic uncertainties and fluctuating trade balances. The weaker peso may increase the cost of imports, affecting inflation, but it could also benefit OFW families as remittances translate to higher peso earnings.
Moving forward, the BSP is expected to monitor external risks and manage exchange rate volatility to maintain financial stability.
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