Manila: Weaker trade-in-goods is attributed to the forecast deficit in the Philippines' balance of payments (BOP) position until 2026, the Bangko Sentral ng Pilipinas (BSP) said Friday. Data released by the central bank showed that as of end-September this year, the country's overall BOP position, which is the sum of its total trade with the rest of the world, stood at a deficit of USD5.3 billion, or about -1.5 percent of domestic output.
According to Philippines News Agency, the actual figure is lower than the projection of the BSP's policy-making Monetary Board (MB) of a USD6.9 billion deficit. For the whole of this year, the projected deficit is seen to reach USD6.2 billion, while it is a deficit of around USD5.9 billion for 2026. The deficit in the country's BOP position is a reversal of the situation in the past, which the BSP, in a statement, traces to 'continued current account shortfall arising from a sustained trade-in-goods gap and weaker services receipts.'
Foreign direct investments and external loans have also moderated amid lingering global policy uncertainty. Goods trade is expected to remain soft, shaped by weaker global demand, easing commodity prices, and slower domestic growth momentum. Frontloading in anticipation of the US tariffs in the first half of the year has helped provide a temporary boost to merchandise exports in 2025, but structural constraints-including logistical bottlenecks, skills mismatches, and high input costs - also continue to weigh on export competitiveness.
BSP said growth of services exports is seen to post slower growth due to higher costs for the business process outsourcing (BPO) and the tourism sectors. Meanwhile, overseas Filipino (OF) remittances are expected to remain resilient, supported by strong global labor demand and the sustained use of formal transfer channels, with the impending US tax on remittances expected to pose minimal impact.
Slower growth is also expected for foreign direct investments (FDIs) reflecting cautious market sentiment and heightened global financial volatility. In the medium term, FDIs are expected to be bolstered by the passage of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, the Capital Markets Efficiency Promotion Act (CMEPA), the Investors' Lease Act, Enhanced Fiscal Regime for Large-Scale Metallic Mining Act and new initiatives on digital connectivity such as the Konektadong Pinoy Act.
This underscores the importance for the national government (NG) to implement these laws in a timely and effective manner, the BSP said. The country's US dollar reserves, or the gross international reserves (GIR), are, in turn, forecast to remain adequate, providing a strong buffer against external liquidity risks.
Citing initial results from the early warning systems (EWS) on currency crisis and debt sustainability, BSP said the country remains resilient to external shocks as of Q4 2025. Manageable external financing needs and ample level of reserves continue to support external sector resilience, it said, as it assures the public that the central bank will continue to engage proactively with external stakeholders and promote macroeconomic stability, closely monitoring emerging risks that impact the external sector.
Amidst the outlook for BOP deficit until next year, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said this situation could still support relatively stable peso exchange rate. Important market lead: If anti-corruption measures/reform and policy priority of further improvement in governance standards are taken seriously, as these remain the missing link to boost confidence by investors on the economy and financial markets, especially FDIs and foreign portfolio investments, he told the Philippines News Agency.
