The Philippines’ balance of payments (BOP) swung to a $1.5 billion deficit in December 2024 from a $642 million surplus in 2023, the Bangko Sentral ng Pilipinas (BSP) reported on Tuesday.
For full-year 2024, the payments surplus shrank to $609 million from a surplus of $3.7 billion the prior year, the BSP said.
The deficit in December reflected the results of the central bank’s net foreign exchange operations and the drawdown on the national government’s deposits with the BSP to pay off its foreign currency debt obligations, BSP Governor Eli M. Remolona Jr. said.
A decrease in the gross international reserves (GIR) to $106.3 billion as of end-December 2024 from $108.5 billion as of end-November 2024, also had an impact on the payments position, he said.
“The balance of risks to the latest BOP outlook is broadly seen to be tilted to the downside,” the BSP governor said.
However, the reserves position represents “a more than adequate external liquidity buffer equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income,” he added.
The BOP is a measure of the country’s economic transactions in a given period with the rest of the world.
RCBC chief economist Michael Ricafort said sustained growth in the country’s structural US dollar inflows “would lead to better data for BOP” in the coming months.
Full-yr 2024 surplus
For full-year 2024, the country’s payments position showed a narrower surplus of $609 million, compared with a $3.7 billion surplus from 2023, the BSP said.
The narrower surplus for the entire year reflected a wider deficit in the goods trade, as well as lower net receipts from trade in services and net foreign borrowings by the national government, Remolona said.
“This decline was partly muted, however, by the continued net inflows from personal remittances as well as net foreign portfolio and direct investments,” he said.
Earlier, the BSP said the latest set of forecasts points to the payments position’s resilience in 2024 and for 2025, showing a decelerating path relative to the BOP results in 2023.
The payments surplus of $3.7 billion in 2023 was a significant improvement in contrast to a $7.3 billion deficit in 2022.
“This assessment is underpinned mainly by stable yet moderating global and domestic economic growth prospects; a slowing inflation trajectory across jurisdictions; lingering geopolitical and weather shocks; as well as possible shifts in US trade and investment policies under the incoming Trump administration,” the Bangko Sentral said.
Positive 2025 prospects
The BSP sees global economic prospects likely remaining steady but positive in 2025, with growth driven largely by advanced economies.
The BOP will stay in a surplus position this 2025 despite the foreseen widening of the current account relative to the 2024 forecast, the BSP said.
“There is still scope for global trade to pick up in 2025 given an environment of moderating global inflation and improved business activity,” the central bank added.
The key downside risk to the 2025 external sector outlook at this point revolves on the uncertainties related to policy shifts in the US trade, investment, and migration policies, it said.
Ricafort, the RCBC economist expects the country’s net foreign direct investments to regain some momentum “after coming from among the highest levels since the pandemic started, as the economy reopened towards greater normalcy.”
The Philippine remains one of the fastest growing economies in the region because of its attractive demographics, the reopening of China’s economy since December 2022, and the investment commitments obtained by the new administration from overseas visits in recent months, Ricafort added.
