The country’s balance of payments (BOP) is seen to swing to a deficit this year and remain in the red next year as global uncertainties and new US tariffs curb trade and investment flows.
According to the Bangko Sentral ng Pilipinas (BSP), the current account shortfall is expected to stay at around 3 percent of GDP in 2025 and 2026.
‘These reflect a widening trade-in-goods gap, subdued services receipts and restrained capital inflows amid global uncertainty and shifting trade policies,’ the BSP said in a statement on Wednesday.
The current account, a key component of the BOP, records a nation’s transactions with the rest of the world, particularly its net trade in goods and services.
‘Goods exports and imports are anticipated to remain sluggish, shaped by softening global demand, easing commodity prices, and tempered domestic growth momentum,’ it said.
Tariff stings
In August, the Philippines recorded its narrowest trade deficit in six months in August, but the improvement masked new signs of weakness as higher American tariffs began to weigh on exports to the United States.
Philippine exports grew by 4.6 percent to $7.1 billion, the weakest pace of expansion in eight months. Exports to the US fell by 11.2 percent, although this was offset by higher demand from other trading partners like Hong Kong (+26.4 percent) and Japan (+4.7 percent).
‘Infrastructure investments, potential trade diversion and efforts to diversify export and import partners may help cushion external shocks. However, structural constraints, such as logistical inefficiencies, skills mismatches and elevated input costs, continue to weigh on export competitiveness,’ the BSP added.
In 2024, the BOP position recorded a surplus of $609 million, shrinking from the $3.7-billion surplus in the previous year. /dda