Philippines posts USD 5.3B BOP deficit in Jan–Sept 2025

The Philippines posted a balance of payments (BOP) deficit of USD 5.3 billion from January to September 2025, equivalent to 1.5 percent of the country’s gross domestic product (GDP), according to the Bangko Sentral ng Pilipinas (BSP).

This marked a reversal from the USD 5.1-billion deficit recorded during the same period in 2024, driven by a wider trade gap and slower external demand.

The BOP summarizes a country’s economic transactions with the rest of the world.

It includes the current account, which records exports and imports of goods and services, as well as income from abroad, plus the financial account (investments and loans) and the capital account (transfers like aid or grants).

Current account deficit narrows slightly

The current account deficit stood at USD 12.5 billion in the first nine months of 2025, or 3.6 percent of GDP.

This was a modest improvement from the USD 13.3-billion shortfall in the same period last year, according to the BSP’s statement released Dec. 12.

The goods trade continued to weigh on the current account, posting a USD 50.0-billion deficit as imports outpaced exports.

Imports were buoyed by demand for telecommunications equipment, electrical machinery, and passenger vehicles.

On the other hand, exports remained resilient, supported by strong global demand for electronics, minerals, and manufactured goods.

Income inflows remain robust

The shortfall in trade was partially offset by steady inflows from services and income accounts. Net receipts from services reached USD 9.8 billion, driven by business process outsourcing (BPO) and travel-related services.

Net primary income, which includes investment earnings and compensation of overseas workers, rose to USD 3.8 billion.

Meanwhile, secondary income – which captures overseas Filipinos’ remittances – hit USD 24.0 billion, up from USD 23.3 billion last year.

Remittances are a key support for household consumption and foreign exchange reserves.

Financial account swings to net inflow

The financial account recorded a net inflow of USD 12.2 billion, equivalent to 3.5 percent of GDP, reversing the USD 21.6-billion net outflow in the same period last year.

This reflected sustained investor interest in the country, supported by capital inflows and government borrowing abroad.

Foreign direct investments (FDI) recorded net inflows of USD 4.6 billion, while portfolio investments (which include stocks and bonds) logged net inflows of USD 1.3 billion.

Other investments – comprising loans, currency, and deposits – posted USD 6.3 billion in net inflows.

Slight BOP surplus in Q3 but year-to-date still negative

Despite the year-to-date deficit, the third quarter of 2025 recorded a modest BOP surplus of USD 273 million. This was significantly lower than the USD 3.7-billion surplus posted in Q3 2024.

The improvement was led by a narrower current account deficit of USD 3.2 billion – down from USD 5.3 billion a year earlier – and a net financial inflow of USD 3.9 billion.

The capital account, which includes capital transfers like debt forgiveness and grants, registered a surplus of USD 77 million for the first three quarters of 2025, up from USD 54 million the year prior.

Gross reserves dip slightly; peso steady

Gross international reserves stood at USD 109.1 billion as of end-September 2025, down from USD 112.7 billion at the end of September 2024.

Despite the decline, the reserve level remains more than adequate to cover the country’s external obligations.

The Philippine peso showed minimal movement, with the average exchange rate appreciating slightly from PHP 57.21/USD 1 in Q3 2024 to PHP 57.11/USD 1 in Q3 2025.

The BSP emphasized that external buffers – such as resilient remittances, steady BPO receipts, and stable foreign investment – continue to support the economy, despite global headwinds.

Still, the central bank cited “tighter global financial conditions and lingering trade uncertainties” as key downside risks to the country’s external position.