THE country’s external position is expected to remain under pressure through 2027, with the Bangko Sentral ng Pilipinas (BSP) projecting a wider balance of payments (BOP) deficit amid elevated global risks, higher oil prices and structural constraints.
“[C]ost-driven trade imbalances and tighter financial conditions continue to shape both current account and financing dynamics,” the central bank said in explaining the outlook in a statement issued late on Friday.
Revised projections set the expected 2026 BOP shortfall at $10.7 billion, up from $7.8 billion three months earlier. That for next year is $11.0 billion, also higher than the previous forecast of $8.5 billion.
The country’s BOP position ended in a $5.7-billion deficit last year, reversing from 2024’s $609-million surplus.
“Elevated oil and refined product prices continue to feed through transport, production, and food costs, raising input costs and compressing real incomes,” the BSP said.
“This dynamic is likely to weigh on consumption and investment while complicating the policy trade-off between supporting growth and containing price pressures, especially if supply disruptions extend into 2027,” it added.
The BOP — a record of an economy’s transactions with the rest of the world — will weaken due to “sustained pressures on the current account,” the central bank said in a statement.
It consists of the current account, which covers trade in goods, services, and primary and secondary income (which includes overseas Filipino worker remittances); the capital account — capital transfers and nonfinancial assets — and the financial account, which consists of investments from abroad.
The current account deficit is expected to be a narrower $18 billion instead of the previous $20.3 billion while the likely shortfall for next year is also lower at $19.7 billion from $21.9 billion.
The trade balance outlooks for 2026 and 2027 is are narrower deficits of $56.7 billion and $61.7 billion, respectively, instead of $59.2 billion and $63.7 billion.
Of this, merchandise exports are still expected to hit $65.3 billion and $67.9 billion this year and the next. The outlook for goods imports, meanwhile, was cut to $135.3 billion and $142 billion, respectively, for 2026 and 2027 from $137.9 billion and $144.8 billion.
The services exports projection was trimmed to $53.0 billion from $53.6 billion while that for imports was cut to $39.8 billion from $40.2 billion. For next year, both were projected to reach $54.6 billion and $42.2 billion, respectively, from $55.7 billion and $42.6 billion.
Travel receipts, which are under services exports, were retained at $8.8 billion for 2026 while the outsourcing revenue outlook was trimmed to $34.3 billion from $34.8 billion.
The travel receipts projection for 2027 also unchanged at $9.0 billion while the outlook for outsourcing was cut to $35.3 billion from $36.2 billion.
The forecasts for remittances this year and next year, meanwhile, are $36.6 billion and $37.7 billion, slightly down from $36.7 billion and $37.7 billion.
As for the financial account, the 2026 projection is an inflow of $9.8 billion, down from $12.9 billion three months earlier. The inflow is expected to hit $10.6 billion next year, also lower than earlier projection of $13.8 billion.
The net foreign direct investment forecast for this year was cut $7.0 billion from $7.5 billion while that for next year was unchanged at $8.0 billion.
Net foreign portfolio investments, meanwhile, were also lowered to $1.8 billion from $3.7 billion. The 2027 outlook was set at $3.3 billion, down from $4.1 billion.
Gross international reserves, lastly, were forecast to end 2026 at a lower $104 billion instead of $111 billion and hit $105 billion next year, also down from the earlier projection of $112 billion.
“Risks remain tilted to the downside, reflecting the possibility of a prolonged or broader Middle East conflict, deeper geopolitical fragmentation, renewed trade tensions, and weaker-than-expected productivity gains from new technologies,” the BSP said.
“Against this backdrop, global trade and capital flows are expected to remain subdued and volatile,” it added. NIÑA MYKA PAULINE ARCEO
