BSP sees wider BOP deficits for 2025-2026 amid global uncertainties

The Bangko Sentral ng Pilipinas (BSP) anticipates larger balance of payments (BOP) deficits for 2025 and 2026 due to a wider trade-in-goods gap, reduced services inflows, and dampened capital investments amidst global economic uncertainties.

The BSP now projects a $6.9-billion BOP deficit for 2025, representing 1.4% of the GDP, an increase from the earlier forecast of $6.3 billion.

For 2026, the projected BOP deficit has been revised to $3.4 billion (0.6% of GDP) from the previous estimate of $2.8 billion.

These revised forecasts are attributed to a widening trade deficit in goods, weaker receipts from services, and restrained capital inflows.

The current account deficit for 2025 is expected to be $16.4 billion, a slight increase from the $16.3 billion projected earlier.

Sluggish growth in both goods exports and imports is anticipated due to softening global demand, declining commodity prices, and moderating domestic growth.

Services export growth, particularly from business process outsourcing (BPO) and tourism, is expected to slow down due to uncertainties related to US reshoring policies and decreased inbound travel.

Foreign direct and portfolio investment inflows are predicted to weaken from 2024 levels because of heightened global financial volatility and cautious investor sentiment.

Despite these challenges, the BSP noted that policy reforms and efforts to diversify trade partners may help mitigate external shocks, although structural constraints like logistical inefficiencies and skills mismatches persist.

The BSP commits to proactively engage with external stakeholders and maintain macroeconomic stability while closely monitoring risks affecting the external sector.