The Philippines’ external position is expected to remain under pressure through 2026 and 2027, with the Bangko Sentral ng Pilipinas (BSP) projecting a widening balance of payments (BoP) deficit and current account gap amid global headwinds and structural constraints.
In its latest outlook, the BSP said the BoP deficit is projected to reach $7.8 billion in 2026 and $8.5 billion in 2027, equivalent to 1.5 percent and 1.6 percent of GDP, respectively — deeper than the $5.7-billion deficit recorded in 2025 (1.2 percent of GDP).
The current account deficit is also expected to widen to around 4.0 percent of GDP over the next two years, from 3.3 percent in 2025, reflecting persistent trade imbalances and rising import costs.
Key driver
The BSP said global conditions remain a key driver of the outlook, citing weaker global trade momentum, elevated geopolitical tensions — particularly in the Middle East — and higher energy prices, all of which are expected to weigh on costs and investor sentiment.
Goods exports, which grew strongly by about 15 percent in 2025, are expected to normalize, expanding by just 3 percent in 2026 and 4 percent in 2027.
Growth will be supported by demand for AI-related electronics, electric vehicle components and data center equipment, as well as sustained demand for agricultural exports such as coconut products.
However, the BSP flagged structural constraints — including high electricity costs, regulatory frictions and logistics bottlenecks — as limiting the country’s export capacity.
On the import side, pressures are expected to persist, with goods imports projected to grow by 5 percent to 6 percent, driven largely by higher oil prices. Services imports, particularly outbound travel, are also expected to outpace services exports, adding further strain to the external balance.
Non-trade inflows will provide partial support. The IT-BPM sector is projected to grow by about 4 percent annually, although gains may be tempered by skills gaps and the uneven impact of artificial intelligence.
Meanwhile, cash remittances are expected to rise by around 3 percent, continuing to serve as a key stabilizing factor despite geopolitical risks.
FDIs as buffer vs widening current account deficits
Foreign direct investment inflows are projected at $7.5 billion to $8.0 billion, providing a steady — though not sufficient — buffer against widening current account deficits. Portfolio flows, meanwhile, are expected to remain sensitive to shifts in global risk sentiment.
Despite the projected widening deficits, the BSP said the country’s external adjustment is expected to be “orderly but gradual,” supported by stable financing inflows and adequate foreign exchange buffers.