The Philippines’ balance of payments (BOP) deficit may widen further in 2025 amid a range of pressure from global trade disruptions to geopolitical tensions, the Bangko Sentral ng Pilipinas (BSP) said.
In its revised outlook released Monday, the BSP projected a $6.3 billion BOP shortfall for 2025, deeper than its previous estimate of $4 billion for the year.
The country recorded a $3-billion deficit for the first quarter, reversing the $238-million surplus from the same period last year.
The BOP measures all transactions between the Philippines and the rest of the world, and serves as a critical gauge of the country’s external financial health.
“While the domestic economy benefits from steady growth, low inflation, and structural reforms, these are offset by global trade uncertainty, heightened geopolitical risks, and weakened investor confidence,” the BSP said.
Current account still in the red
The widening of the BOP gap is traced to the current account deficit, projected at $16.3 billion in 2025.
While narrower than the earlier forecast of $19.8 billion, it still reflects a persistent imbalance between national savings and investment needs.
In the first quarter of 2025 alone, the current account posted a $4.2-billion deficit, double the $2.1-billion deficit in Q1 2024. For full-year 2024, the gap stood at $17.5 billion.
The BSP said the outlook points to sustained reliance on external financing to support the country’s
infrastructure-led, investment-driven growth strategy.
Trade challenges mount
The central bank flagged major hurdles in goods exports, citing global trade uncertainty, lagging competitiveness, and ongoing constraints in the semiconductor sector. Even opportunities from trade diversion are being undercut by logistical bottlenecks and labor market limitations.
Meanwhile, stable domestic demand and public infrastructure spending continue to fuel imports, though the value of inbound goods has moderated due to falling global commodity prices, particularly for oil.
Services resilient but under pressure
The services trade remains a bright spot, though risks are rising. BSP lowered its 2025 forecast for services exports to $55.1 billion, from the previous $56.1 billion.
In the first quarter of 2025, services exports reached $12.3 billion; for full-year 2024, they totaled $52 billion.
The outsourcing sector remains steady, supported by strong demand for contact center services. However, the BSP warned of threats from US job reshoring trends and talent shortages at home.
Tourism is also recovering, aided by better airport facilities and accommodation options. But competition from regional destinations and rising transportation costs could slow momentum.
Remittances hold firm
Remittance inflows remain a key buffer, with BSP maintaining its $35.5-billion forecast for 2025.
In the first quarter, cash remittances totaled $8.4 billion, while the 2024 total was $34.5 billion.
“Steady remittance flows continue to support external accounts, driven by strong labor demand in host countries and aging global populations,” the BSP said.
The central bank added that digital payments innovation and the Philippines’ removal from the FATF gray list have lowered remittance costs. Still, rising protectionism in some labor-hosting nations poses new risks.
Investment inflows subdued
Gross international reserves are expected to slightly dip to $104 billion this year from $106.3 billion in 2024.
While foreign investment inflows remain in positive territory, the BSP said global headwinds are hitting sentiment.
Persistent policy uncertainty, slower global growth, and heightened geopolitical risks are discouraging investors.
“Nevertheless, the government’s push for infrastructure, fiscal incentives, and investment-enhancing reforms is expected to support long-term capital inflows,” the BSP said.
External headwinds
John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, said the BSP’s revised BOP forecast underscores the growing strain from global trade and geopolitical shocks.
“Weaker export demand, volatile commodity prices, and capital flow uncertainties are putting pressure on the country’s external position,” Rivera said. “A wider BOP deficit signals more dollars flowing out than in, which could weigh on the peso and prompt tighter monetary or fiscal adjustments if sustained.”
Rivera added that policy must now focus on long-term resilience.
Geopolitical shocks
Economist Michael Ricafort of RCBC echoed the BSP’s view, warning that external shocks could amplify downside risks.
“Slower global growth from Trump-era tariffs, the Israel-Iran conflict, and other geopolitical risks could impact trade, jobs, and commodity prices. These factors may widen the trade gap and slow growth in key dollar inflows such as OFW remittances, BPO earnings, and tourism revenues,” Ricafort said.
The BSP acknowledged that its forecasts remain sensitive to fast-evolving global dynamics.
“The BSP will continue to monitor external developments and their potential impact on price and financial stability,” it added.
