BoP deficit seen at $3B in Q1

The country posted a $3-billion deficit in global financial transactions, or balance of payments (BoP), in the first quarter of this year, reversing from a surplus of $238 million in the same quarter of 2024, after payments for imports surpassed export income.

The Bangko Sentral ng Pilipinas (BSP) said the country's trade deficit doubled to $4.2 billion from $2.1 billion.

The BSP said this resulted from lower income from both exported goods and services, while outbound travel spending rose.

Exports income stood at $14.7 billion, as demand for minerals and coconut oil surged by 25 percent and 91 percent, respectively. Major markets included the US, Japan, and Hong Kong.

However, import payments reached $31.5 billion, with the largest receipts for passenger cars and animal and vegetable oils, which grew by 26 percent and 98 percent, respectively. Major import sources were China, Indonesia, and Vietnam.

Meanwhile, receipts for export services slowed by 1.5 percent, partly due to lower transport income of $755 million from $1.1 billion.

However, payments for import services rose by 1.7 percent, reflecting higher spending on travel at $3.2 billion from $3 billion.

These resulted in lower net receipts for services trade, which fell to $3.3 billion from $3.7 billion.

While exports of agricultural goods improved, Chinabank said shipments of electronic parts might continue to moderate.

"The outlook for electronics exports may stay muted if tariff-related pressures persist, on top of the ongoing issue of inventory correction," the bank said.

"Government initiatives to secure trade deals and improve export competitiveness should help in navigating through headwinds," Chinabank said.

Chinabank also said import payments might sustain growth as more consumers gain extra funds after the BSP possibly declares a lower policy lending rate for banks.

"Looking ahead, however, the low inflation environment as well as further interest rate cuts should support demand for consumer goods," the bank's analysts said.

Meanwhile, the country received additional funds from overseas Filipino workers' remittances, which rose by 2.9 percent to $7.3 billion.

Surplus from disposed capital or non-financial assets jumped by nearly 36 percent to $23 million from $17 million.

However, amid global trade uncertainties, foreign investors restrained capital inflows into the local economy, leading to a 41 percent decline in net foreign direct investments at $1.8 billion, down from $3 billion.

The BSP expects sustained capital inflows to the Philippines after global credit rating agencies affirmed its investment-grade ratings and stable economic outlooks. The Philippines recently received a BBB rating from Fitch Ratings and an A- from the Japan Credit Rating (JCR) Agency, Ltd.

"The JCR rating action recognized the Philippines’ sustained economic growth. It expects the country’s GDP growth to stay in the upper 5 percent range this year," BSP said in a statement.