The Philippines’ balance of payments (BOP) is projected to return to a deficit for the first time in two years, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
In a statement dated 26 December, the BSP said the country’s BOP — a comprehensive summary of the Philippines’ financial and economic transactions with the rest of the world — is expected to slip into deficit in 2025 and 2026 amid sustained domestic and global headwinds.
“This reversal largely reflects a continued current account shortfall arising from a sustained trade-in-goods gap and weaker services receipts. Foreign direct investments and external loans have also moderated amid lingering global policy uncertainty,” the BSP said.
The central bank projects the year-end 2025 BOP deficit at $6.2 billion (₱364.57 billion), equivalent to about 1.3 percent of gross domestic product (GDP). This represents a deterioration of around $1.4 billion from the $4.8-billion deficit recorded for the January-to-November period.
The BOP tracks the flow of money, goods, services, and financial assets — including international trade and foreign direct investments (FDIs). A deficit indicates that more funds are leaving the economy than entering it, typically due to weaker exports, softer capital inflows, or lower remittances.
The BSP said trade in both goods and services is expected to remain under pressure, weighed down by logistical bottlenecks, skills mismatches, and elevated input costs that continue to constrain growth.
Foreign direct investments are likewise projected to ease from 2024 levels. FDIs have taken a sharp hit since July, when the issue of alleged ghost flood control projects rose to national prominence. Latest central bank data show FDI inflows plunging to $320 million in September from $1.3 billion in July — a roughly 75 percent decline since the floodgate scandal broke.
The BSP said “cautious market sentiment and heightened global financial volatility” have weighed on investment flows. Still, it noted that recent policy measures — including the CREATE MORE Act, the Capital Markets Efficiency Promotion Act (CMEPA), and the Konektadong Pinoy Act — could support modest FDI gains over the medium term. The central bank projects FDIs to reach $7 billion by the end of 2025.
Despite these headwinds, remittances from overseas Filipino workers (OFWs) remain resilient, supported by strong global labor demand and the continued use of formal remittance channels. The BSP added that the planned US tax on remittances is expected to have only a minimal impact.
The central bank projects remittances to reach $35 billion (around P2.1 trillion) by the end of the fourth quarter.
The BSP said it remains committed to proactive engagement with external stakeholders and to safeguarding macroeconomic stability, while closely monitoring emerging risks affecting the country’s external position.