Philippines posts USD 2.6B BOP deficit in Q2 2025

By Francis Allan L. Angelo

The Philippines recorded a balance of payments deficit of USD 2.6 billion in the second quarter of 2025, reversing a surplus of USD 1.2 billion in the same period last year.

The balance of payments, which tracks money entering and leaving the economy, consists of the current account, financial account, and capital account.

The Bangko Sentral ng Pilipinas said the deficit was largely due to lower net inflows in the financial account as local banks lent more to nonresidents and repaid foreign loans.

Portfolio and direct investment inflows also weakened as global financial market uncertainty kept investors cautious.

Meanwhile, the current account deficit narrowed to USD 5.0 billion, down 15.8 percent from USD 5.9 billion last year, supported by stronger exports of copper anodes, electronics, mineral products, and gold.

Exports rose 17.5 percent year-on-year to USD 16.3 billion, while imports grew 4.9 percent to USD 32.3 billion, driven by telecommunications equipment, electrical machinery, and aircraft purchases.

Remittance inflows remained strong at USD 7.7 billion, up 3.3 percent, though higher outbound travel spending and weaker tourism receipts cut into services earnings.

For the first half of 2025, the BOP posted a deficit of USD 5.6 billion, a reversal from a USD 1.4 billion surplus in the same period in 2024.

The wider deficit reflected weaker financial account inflows, which fell to USD 8.5 billion from USD 10.6 billion, as banks expanded foreign lending and residents invested more in overseas debt securities.

The current account gap also widened to USD 9.2 billion from USD 8.1 billion as imports outpaced exports amid resilient domestic demand and sustained economic growth.

Gross international reserves stood at USD 106.0 billion by end-June 2025, enough to cover 7.1 months of imports and 3.7 times the country’s short-term external debt.

The Philippine peso averaged PHP 56.28 per USD 1 during the quarter, appreciating 2.7 percent year-on-year from PHP 57.80, supported by easing global tensions, strong remittances, and a narrowing trade deficit.

A balance of payments deficit puts pressure on the peso and foreign reserves, which can raise the cost of imports such as fuel and food.

For ordinary Filipinos, this can mean higher prices for essential goods and potential borrowing cost increases if the central bank adjusts policy to stabilize the currency.