The Philippines' balance of payments (BoP) deficit widened to $5.3 billion in the first quarter of 2026, equivalent to 4.5 percent of gross domestic product (GDP), as higher import costs and weaker financial inflows weighed on the country's external position, the Bangko Sentral ng Pilipinas (BSP) said.

The latest deficit was significantly larger than the $3.0-billion shortfall recorded in the same period last year, when the BoP gap stood at 2.6 percent of GDP.

The BoP serves as a comprehensive record of the Philippines' transactions with the rest of the world, including trade, investments, and financial flows.

According to the BSP, the BoP gap was attributable to the wider first-quarter deficit, a combination of higher external debt repayments, softer foreign direct investment (FDI) inflows, and a larger current account deficit driven by rising import costs.

Financial account net inflows, on the other hand, declined sharply as banks repaid foreign loans and nonresidents withdrew deposits from local banks.

While direct investments remained positive, inflows moderated amid cautious investor sentiment.

The country's current account deficit widened to $5.7 billion from $4.2 billion a year earlier as the trade-in-goods deficit expanded to $17.1 billion from $16.4 billion. Imports grew 8.7 percent to $48.3 billion, outpacing the 5.9-percent increase in exports to $42.6 billion.

Despite the wider trade gap, exports benefited from sustained global demand for electronics, while the services sector continued to provide support through tourism, manufacturing services, and business process outsourcing revenues.

Resilient remittances

Overseas Filipino remittances also remained resilient, with personal remittances rising 2.8 percent to $9.66 billion during the quarter.

Net FDI inflows reached $2.1 billion, slightly below the $2.2 billion recorded a year earlier, while portfolio investment outflows eased as residents reduced investments in foreign debt securities.

However, foreign investors continued to trim their holdings of Philippine debt instruments.