THE Bangko Sentral ng Pilipinas (BSP) is expecting wider balance of payments (BOP) deficits this year and the next, citing the broader trade-in-goods gap and lower services inflows, given the current global uncertainties and the changing trade conditions.
According to the central bank, the overall BOP position is now expected to post a $6.9-billion deficit or 1.4% of the gross domestic product (GDP), wider than its initial forecast of $6.3 billion or 1.3% of the GDP.
It also adjusted its 2026 forecast to a $3.4-billion deficit or 0.6% of the GDP in 2026 from the $2.8-billion deficit or 0.5% of GDP it made in the second quarter.
âThese reflect a widening trade-in-goods gap, subdued services receipts, and restrained capital inflows amid global uncertainty and shifting trade policies,â the BSP said in an accompanying statement.
The payments position takes into account Philippine transactions with the rest of the world during a specific period. A surplus means more funds entered the country, while a deficit means more funds exited.
The current account â which tracks the flow of goods, investment earnings, and foreign aid â is expected to post a $16.4-billion deficit this year, slightly higher than the $16.3-billion deficit projected in the second quarter.
âGoods exports and imports are anticipated to remain sluggish, shaped by softening global demand, easing commodity prices, and tempered domestic growth momentum,â the central bank said.
âGrowth in services exports, particularly in business process outsourcing (BPO) and tourism, is expected to moderate as the sector contends with uncertainties surrounding US reshoring policies and weakening inbound travel,â it added.
Latest data available from the Philippine Statistics Authority (PSA) show that the balance of trade in goods posted a $3.540-billion deficit in August, narrower than the $4.422 billion deficit in July, and the $4.395-billion deficit in August 2024.
âInfrastructure investments, potential trade diversion, and efforts to diversify export and import partners may help cushion external shocks. However, structural constraints, such as logistical inefficiencies, skills mismatches, and elevated input costs, continue to weigh on export competitiveness,â the BSP said.
The central bank also expects foreign direct and portfolio investment inflows to soften from 2024 to reflect âheightenedâ global financial volatility and cautious investor behavior, but it sees policy reforms such as the amendments to the Investorsâ Lease Act to improve the investment climate.
âThe Bangko Sentral ng Pilipinas will continue to engage proactively with external stakeholders and uphold macroeconomic stability, closely monitoring emerging risks that impact the external sector,â the central bank added. (GMA Integrated News)
