The Philippines’ balance of payments (BOP) position registered a $5.7-billion deficit in 2025, equivalent to 1.2 percent of gross domestic product (GDP), reversing the $609-million surplus recorded in 2024, the Bangko Sentral ng Pilipinas (BSP) said.

The BOP measures the country’s economic transactions with the rest of the world — including trade in goods and services, investments, loans and remittances, as well as foreign direct investments (FDIs) — and serves as a key indicator of the economy’s external stability.

According to the BSP, the deficit largely reflected softer inflows in the financial account, which consists of FDIs and other investment and capital flows, amid tighter global financial conditions.

The 1.2-percent BOP deficit relative to GDP comes after the release of the country’s weak 2025 growth figures, which slowed to 4.4 percent amid persistent governance issues stemming from the infrastructure scandal. Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio Balisacan earlier said the country would have met its economic growth target in 2025 if not for the flood control corruption controversy.

“If public construction could have been flat, our GDP in 2025 would have actually increased from 4.4 percent to 5.5 percent. In other words, the sharp contraction of public construction because of the corruption scandal contributed to something like 1.1 percentage points [to the decline],” Balisacan said.

Foreign direct investments (FDIs) likewise fell to a five-year low in 2025 as governance concerns weighed on foreign investor sentiment. The central bank said FDI net inflows reached $7.8 billion from January to December 2025 — a 17.1 percent decrease from the previous year and the lowest level since the height of the Covid-19 pandemic.

The BSP said net inflows weakened as residents increased investments in foreign-issued debt securities, while external loan availments by domestic banks and net inflows of foreign direct investments moderated during the year.

Despite this, the current account — which includes income from trade as well as remittances from overseas Filipino workers (OFWs) — improved, with the deficit narrowing to $16.3 billion, or 3.3 percent of GDP, in 2025 from $18.6 billion, or 4.0 percent of GDP, in 2024. The improvement was supported by stronger export performance and continued inflows from overseas Filipinos.

The BSP said remittances remained a key stabilizing factor for the external sector, helping sustain household consumption and providing a steady source of foreign exchange.

The central bank previously reported that cash remittances from overseas Filipinos reached a record high of $35.63 billion in 2025. Meanwhile, personal remittances — which include both cash transfers and the compensation of overseas Filipinos — reached $3.89 billion in December 2025. This brought the full-year total to an all-time high of $39.62 billion, up 3.3 percent from $38.34 billion in 2024.

The BSP said the annual figure represents 7.3 percent of the country’s GDP and 6.4 percent of gross national income (GNI).

At the same time, the central bank said the business process outsourcing (BPO) sector continued to generate strong services export revenues as global demand for digital and outsourcing services remained firm.

Quarterly data also showed a more moderate external gap toward the end of the year. The country posted a $346-million BOP deficit in the fourth quarter of 2025, a sharp improvement from the $4.5-billion shortfall recorded in the same period in 2024.

The BSP said the country’s external accounts remain supported by structural inflows such as remittances and services exports, even as global financial conditions continue to influence cross-border investment and capital flows.