By Katherine K. Chan, Reporter
THE PHILIPPINES may continue running balance of payments (BoP) and current account deficits until next year as persistent global economic woes and geopolitical tensions strain the country’s external position, the central bank said.
The Bangko Sentral ng Pilipinas (BSP) now expects the country’s BoP position, which reflects its economic transactions with other nations, to end at a $9.2-billion deficit or -1.8% of gross domestic product (GDP) this year.
This is narrower than its earlier forecast of a $10.7-billion gap or -2.1% of GDP, but wider than the $5.7-billion deficit or -1.2% of GDP recorded last year.
For 2027, the central bank sees the BoP deficit at $8.5 billion or -1.6% of GDP, better than its previous estimate of $11 billion or -2.1% of GDP.
“The BSP projects the balance of payments to remain in deficit in 2026-2027, reflecting a challenging global environment of subdued growth, geopolitical tensions, and elevated fuel and transport costs,” the BSP said in a statement on Tuesday.
According to the central bank, high global prices of oil and other commodities will likely keep the country’s BoP position in a deficit over the next two years.
Meanwhile, the BSP raised its current account deficit forecast to $19.1 billion or -3.8% of GDP this year.
This is wider than the $18-billion gap or -3.6% of GDP it previously projected and the country’s $16.9-billion or -3.5% of GDP current account deficit in 2025.
The current account measures the country’s trade in goods and services, as well as primary and secondary income.
By 2027, the gap could widen further to $19.4 billion or -3.6% of GDP, according to the central bank.
TRADE BALANCE
At the same time, the BSP projects the country’s trade balance in goods and services to settle at a $58.6-billion deficit or -11.7% of GDP this year.
This is wider than the previous projection of $56.7 billion or -11.3% of GDP and the actual $53.8-billion trade gap or -11% of GDP last year.
For 2027, the trade balance is expected to post a deficit of $60.3 billion or -11.1% of GDP.
“Elevated fuel and commodity prices remain the principal driver, but imports growth is expected to compress in the second half of 2026, as firms and households adjust to slower domestic activity and high inflation,” the BSP noted.
“Goods exports, led by electronics, provide resilience, though its momentum is likely to moderate as global demand remains uneven,” it added.
Broken down, the country’s goods exports are seen to rise by 6% year on year to generate a total of $67.2 billion in 2026, easing from last year’s 15.2% annual growth to $63.4 billion, but faster than the previous forecast of 3%. For next year, goods exports growth is also expected to moderate to 4% to $69.9 billion.
On the other hand, goods imports could jump by 7% to $139.7 billion this year, outpacing the 5.4% climb to $130.6 billion in 2025 and the BSP’s earlier 4% estimate.
However, BSP sees softer goods imports growth next year at 3% to $143.9 billion.
Services exports, meanwhile, may edge up by 4% to $53.6 billion this year, faster than the earlier projection of 3%, and the 1.6% increase to $51.5 billion in 2025.
The central bank also sees a 4% annual rise in services exports to $55.7 billion next year.
It also raised its growth forecast for travel receipts to 5% ($9.2 billion) from 1% ($8.8 billion) for this year, and to 5% ($9.6 billion) from 2% ($9 billion) in 2027.
Likewise, revenue growth in the business process outsourcing (BPO) sector could hit 3% to $34.5 billion this year, faster than the 2.5% previously expected.
By 2027, BPO revenue growth may hold steady at 3% to $35.5 billion.
On the other hand, the BSP maintained its growth projections for services imports at 4% for this year and 6% next year, but priced in slightly slower receipts at $39.6 billion (from $39.8 billion) and $42 billion (from $42.2 billion), respectively.
The central bank also kept its growth projections for travel imports at 7% to $16.1 billion for 2026 and 9% to $17.6 billion for 2027.
“Inflows from services receipts and remittances will continue to support the external position, but these are not sufficient to fully offset the trade-driven deficit,” the BSP said.
DOLLAR FLOWS
Meanwhile, the central bank expects cash remittances to pick up by 2.7% to $36.6 billion this year and by 3% to $37.7 billion next year. These are unchanged from previous forecasts but slower than the 3.3% increase to $35.6 billion in 2025.
The BSP said financial account inflows could reach $11.4 billion this year, larger than the earlier forecast of $9.8 billion. For 2027, the inflows are seen to hit $11.8 billion, also higher than the previous estimate of $10.6 billion.
Of this, foreign direct investments (FDI) are expected to yield a smaller net inflow of $6.5 billion this year from the $7-billion projection as of June.
The BSP also cut its FDI net inflows estimate for 2027 to $7 billion from $8 billion.
The central bank maintained its projection for net inflows from foreign portfolio investments this year at $1.8 billion, but trimmed it to $3 billion from $3.3 billion for 2027.
“Net financial inflows are projected at $11.4 billion in 2026 and $11.8 billion in 2027, providing partial financing support for the current account deficit,” the BSP said.
“Other investment inflows will be driven particularly by foreign borrowing by the National Government, corporations, and banks. Direct investment remains positive but modest, while portfolio flows are sensitive to global financial conditions,” it added.
The central bank also left its projections for gross international reserves unchanged at $104 billion for 2026 and $105 billion for 2027.
“Gross international reserves are projected to remain above $100 billion in both 2026 and 2027, serving as a critical buffer against external shocks,” it said. “Alongside services exports and remittances, these reserves will continue to support the economy’s adjustment to external pressures.”