Philippines Posts Q1 2025 Balance-of-Payments Deficit

The Philippines’ balance of payments posted a US$3.0 billion deficit in the first quarter of 2025, reversing a US$238 million surplus in the same period last year.

The shift was driven by a current account deficit that doubled from US$2.1 billion in Q1 2024 to US$4.2 billion, equal to 3.7 percent of gross domestic product.

Merchandise imports surged 8.0 percent to US$31.5 billion while exports rose only 1.2 percent to US$14.7 billion, widening the goods trade gap.

Export income from services declined due to lower transport receipts and stronger outbound travel spending, though these were offset slightly by increased remittances.

The financial account recorded robust net inflows of US$6.7 billion, up 43.2 percent from US$4.6 billion a year earlier, driven by investments in direct, portfolio, and other accounts.

Net direct investment inflows rose to US$1.8 billion, a 179.5 percent increase from Q1 2024, while portfolio investments increased to US$978 million.

The capital account also turned positive, posting a surplus of US$23 million—35.9 percent higher than Q1 2024—largely due to disposals of intellectual property.

Gross international reserves stood at US$106.7 billion at the end of March 2025, up from US$104.1 billion a year ago and enough to cover over seven months of imports.

The peso averaged PHP57.97 to US$1 in Q1 2025, appreciating 0.3 percent from Q4 2024 but depreciating 3.5 percent from PHP55.96 a year earlier.

The Bangko Sentral ng Pilipinas attributed the deficit to the widened goods trade gap, government dollar payments, and BSP foreign exchange operations, while noting solid remittance and investment inflows.

In March alone, the BOP swung to a US$2 billion deficit from a US$3.1 billion surplus in February, bringing the cumulative Q1 deficit to US$3 billion.

Economists caution that sustained trade deficits and global uncertainties may pressure the peso and external reserves, underscoring the need to strengthen exports and attract stable capital.

Despite the deficit, the central bank stressed that the current GIR level provides a “robust external liquidity buffer,” equivalent to over 3.3 times short-term external debt.