Manila: The Bangko Sentral ng Pilipinas (BSP) has announced a revision to the balance of payments (BOP) projection for 2025, highlighting that global economic uncertainty is expected to impact the BOP outlook. The BOP serves as a summary of a country's economic transactions with the rest of the world over a specific period and can result in a surplus, deficit, or balance.
According to Philippines News Agency, the BSP stated that the BOP is now expected to register a deficit of USD4 billion this year, contrasting with the earlier projection of a USD2.1 billion surplus. Despite these challenges, the BSP noted that domestic growth prospects are anticipated to cushion the effects of global economic headwinds. Factors such as private consumption, investments, government infrastructure spending, and legislative reforms aimed at improving the business environment are expected to encourage foreign investments and positively influence the external sector outlook in the near to medium term.
For 2026, the BOP is projected to post a deficit of USD4.3 billion. The BSP explained that the Philippine BOP position is anticipated to weaken in 2025-2026 due to slower global trade and subdued investor confidence associated with increased uncertainty in global trade policy and geopolitical developments. However, the outlook still reflects sustained expansion in the domestic economy, supported by easing inflation and less restrictive monetary policy.
The BSP also expects a wider current account gap in 2025 and 2026 due to a higher trade-in-goods deficit and lower net receipts in trade-in-services. The current account shortfall is projected to widen to USD19.8 billion this year, rising to USD21.2 billion next year. Goods export growth is forecasted to reach 1 percent this year and 2 percent in 2026, while imports are predicted to grow by 4 percent in both years.
Services exports are anticipated to experience modest expansion given slower growth in Business Process Outsourcing (BPO) services. The BPO sector is projected to grow by 5 percent this year, slightly lower than the previously estimated 6 percent, and maintain a 5 percent growth rate next year. The BSP noted that the outlook for BPO services accounts for the adverse impact of the US job reshoring agenda and domestic challenges in the supply of skilled workers in Generative AI and data analytics.
Overseas Filipino remittances are expected to increase by 2.8 percent in 2025 and 3 percent in 2026. The BSP mentioned that the outlook for 2025 is marginally below the long-term trend due to localization efforts in major overseas Filipino host economies like Saudi Arabia and Qatar, which affect deployment prospects. On the other hand, stricter US immigration policies are anticipated to have minimal impact on remittances, as most US-based Filipinos are permanent residents or documented migrants.
The financial account is expected to benefit from sustained net inflows from both foreign direct and portfolio investments, supported by the country's macroeconomic fundamentals and ongoing reforms. The Philippines' exit from the Financial Action Task Force Grey List is also projected to boost investor confidence.
Meanwhile, the country's gross international reserves are likely to reach USD105 billion in 2025 and 2026, a decrease from USD110 billion in 2024, reflecting reduced foreign exchange inflows from exports of goods and services, as well as investments. The BSP emphasized the limitations of forecasts due to external challenges and reiterated its commitment to closely monitoring emerging external sector developments and risks that could affect its price and financial stability objectives.
