THE Philippines’s balance of payments (BOP), which captures its transactions with the rest of the world, swung to a deficit in July after staying in surplus for two straight months, due to the renewed pressure from a ‘large’ merchandise trade gap, portfolio investment outflows, and external debt-related payments.
Analysts pointed this out after data from the Bangko Sentral ng Pilipinas (BSP) showed the country’s BOP swung to a deficit of $1.47 billion in July 2026 after posting a surplus for two straight months, from May to June 2026, when it posted a $3.4-billion surplus.
Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines (UBP), said the July BoP deficit ‘mainly reflected the country’s persistent trade gap, portfolio investment outflows, and external debt-related payments, particularly after June benefited from substantial foreign borrowing inflows.’
John Paolo R. Rivera, Senior Research Fellow at Philippine Institute for Development Studies (PIDS), explained, however, that the reversal from June’s large surplus ‘should not by itself be interpreted as a deterioration in the external position,’ adding that monthly BOP figures can be ‘volatile.’
Meanwhile, on a year-on-year basis, the BOP deficit of $1.47 billion in July 2026 was 780.24 percent wider than the $167 million gap posted in July 2025.
Jonathan L. Ravelas, senior adviser at Reyes Tacandong and Co., explained that while the year-on-year deterioration looks ‘significant,’ monthly BoP figures are ‘often influenced by the timing of large transactions and should not be viewed in isolation.’
Data from the central bank also showed the cumulative deficit is now at $5.35 billion in the January to July 2026 period, which is 7.12-percent narrower than the $5.76-billion deficit posted in the seven-month period in 2025.
Asuncion and Ravelas said the year-to-date BOP deficit is still well below the central bank’s full-year projection of $10.7-billion deficit for 2026.
‘More importantly, the country’s cumulative deficit of $5.3 billion remains well below the BSP’s full-year projection of $10.7 billion,’ Ravelas said.
Asuncion noted that the country’s external position remains ‘manageable,’ with the year-to-date BOP deficit ‘still tracking below the BSP’s full-year projection.’
Key factors to watch
Rivera said the BOP may remain under pressure and volatile in the near term given elevated oil prices, geopolitical uncertainty, and global financial conditions.
‘But remittances, IT-BPM receipts, tourism, and exports should continue to provide important bu?ers,’ added Rivera.
While the Philippines continues to benefit from ‘strong structural dollar inflows,’ Ravelas emphasized that ‘maintaining a healthy balance between foreign exchange earnings and import requirements will be crucial to keeping the external position stable amid ongoing global economic and geopolitical uncertainties.’
Asuncion explained that while the peso’s depreciation could provide some support to remittances, tourism, and exports, it may also increase the import bill and inflation pressures.
For the coming months, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corporation (RCBC), said markets would anticipate developments related to any possible extension of the 60-day US-Iran interim deal or the lack thereof.
Ricafort underscored the importance of keeping an eye on developments tied to such a deal between the two nations, ‘especially on the Strait of Hormuz shipping traffic and the impact on global crude oil prices, the country’s oil import bill, trade deficit, prices/inflation, global investments/financial market performance, and the effects on overall BOP and [gross international reserves] GIR data.’
Further, Ricafort said it is important to monitor the ‘continued growth’ of OFW remittances, BPO revenues, foreign investments, foreign tourism receipts, foreign debt proceeds, among others, which he said could lead to ‘better BOP and GIR data than otherwise.’
In a statement on Thursday, the BSP said the year-to-date BOP position reflected the ‘continued trade-in-goods deficit and net outflows from foreign portfolio investments.’
‘These were partly offset by the sustained net inflows from personal remittances of overseas Filipinos (OFs), foreign borrowings by the NG, trade in services, and foreign direct investment,’ added the central bank.
Dollar reserves
Meanwhile, the BSP said GIR remained ‘sufficient’ to meet the country’s import needs, service its external debt obligations, and serve as a buffer against external economic shocks in July.
GIR settled at US$103.3 billion as of end-July 2026 compared with US$104.7 billion as of end-June 2026, the BSP added.
The end-July GIR level can cover up to 6.7 months’ worth of imports of goods and payments of services and primary income.
‘It can likewise service about 3.7 times the country’s short-term external debt based on residual maturity,’ BSP also noted.