The Malaya Business News Team
Philippine exports and remittances, the country’s two main sources of foreign exchange, are increasingly getting exposed to risk from a slowing global economy and rising trade barriers, BMI Country Risk & Industry Research said Monday.
The Fitch Solutions research unit warned that the country’s external accounts will remain under pressure from trade fragmentation and higher US tariffs.
In particular, it cited pressure from the current account deficit, which is projected to average 2.8 percent of gross domestic product (GDP) over the next three years—well above the pre-pandemic shortfall of 0.4 percent.
“Trade fragmentation and its knock-on effects on global demand will weigh heavily on Philippine exports,” BMI said, adding that weakening growth in the United States and China, the country’s top two trading partners, has become a central concern.
US GDP is projected to slow to 1.7 percent this year from 2.8 percent in 2024, while China’s growth could fall to 4.2 percent by 2026 amid a property-sector slump.
The report also flagged Washington’s increasingly protectionist stance, saying higher tariffs will further stifle global trade flows.
BMI noted that while the Philippines earns substantial foreign exchange from its business process outsourcing sector—about 15 percent of the global outsourcing market—these inflows will not be enough to offset weaker trade and services activity.
Warning now felt on the ground
Jonathan Ravelas, senior advisor at Reyes Tacandong & Co., said the warning is already being felt on the ground.
“Yes, Philippine exports are feeling the heat. The 19 percent US tariff slapped on ASEAN goods, including ours, is a direct blow,” Ravelas said.
“Exporters already expect to miss targets this year, citing global slowdown and trade tensions,” he stressed.
On remittances, Ravelas said growth is slowing to 2.8 percent this year from 3 percent in 2024, with added uncertainty from US immigration crackdowns and a proposed remittance tax.
“While most US-based Filipinos are permanent residents, even small policy shifts can shake confidence,” he said.
“The global slowdown and Trump’s trade war are real risks, Ravelas noted.
“We need to diversify markets, strengthen domestic demand, and support exporters and OFWs with smart, targeted policies. No time to wait—action is key,” he said.
BMI’s report echoed the concern, forecasting that remittances will ease as host countries such as the United States, United Kingdom, Saudi Arabia, Japan and Singapore also face weaker growth.
The Philippine trade deficit in goods is expected to hit $74.3 billion in 2025 and widen further to $90.5 billion by 2028.
Wider deficits
As a result, the overall current account deficit is projected to stay close to 3 percent of GDP until 2026, despite inflows from services and remittances providing some relief.
The Bangko Sentral ng Pilipinas (BSP), in its own outlook, expects the balance of payments to remain in deficit, at 1.3 percent of GDP in 2025 and 0.5 percent in 2026, or $6.3 billion and $2.8 billion, respectively.
The BSP noted that steady domestic growth, low inflation and structural reforms provide a buffer, but said these are being offset by global trade uncertainty, heightened geopolitical risks and weakened investor confidence.
With trade and investment flows softening, it added, the Philippines’ ability to build up foreign exchange reserves remains constrained. (With additional report from Ruelle Castro)
