The Philippines' balance of payments (BoP) deficit is expected to widen through 2027 as weak global trade and tighter financing conditions pressure the country's external position.
Current forecasts project a year‑end BoP deficit of $10.7 billion, equal to 2.1 % of GDP, up from an earlier estimate of $7.8 billion. The outlook for 2027 shows the deficit expanding to $11 billion, also 2.1 % of GDP, versus a prior projection of $8.5 billion.
Analysts anticipate the external position will remain strained in 2026‑2027, with cost‑driven trade imbalances and tighter financial conditions shaping both the current account and financing dynamics.
The current account deficit has been revised to $18 billion this year, or 3.6 % of GDP, narrower than the previous $20.3 billion estimate. In the first quarter, the gap widened to $5.66 billion, compared with $4.2 billion a year earlier.
For 2027, the current account gap is forecast at $19.7 billion, or 3.7 % of GDP, a modest improvement from the earlier $21.9 billion projection.
Global growth is projected to remain modest over the next two years, slower than pre‑pandemic levels and constrained by geopolitical shocks. Risks include prolonged Middle East conflict, deeper geopolitical fragmentation, renewed trade tensions, and weaker productivity gains from new technologies.
Trade in goods and services is expected to improve modestly, with the trade deficit projected at $56.7 billion by the end of 2026, down from $59.2 billion. The 2027 deficit is now seen at $61.7 billion, lower than the previous $63.7 billion estimate.
Elevated global energy prices continue to exert adverse terms‑of‑trade pressure, sustaining the trade deficit despite softer demand. Structural import needs for energy and investment‑related goods limit the pace of adjustment, while gains in electronics are offset by climate‑related risks to agricultural exports and slower global trade.
Goods export growth is maintained at 3 % for this year and 4 % for next year. Goods import growth has been cut to 4 % from 6 % for this year, with the 2027 forecast unchanged at 5 %.
Services export growth has been reduced to 3 % for both this year and 2027, down from 4 %. Services import growth is now projected at 4 % for this year, revised from 5 %, while the 2027 outlook remains at 6 %.
Cash remittances are expected to grow 2.7 % to $36.6 billion in 2026, slightly lower than the previous 3 % estimate. Growth is projected to return to 3 % in 2027, with the slowdown attributed to reduced deployment to the Middle East, AI‑related restructuring in IT‑BPM, weaker investment, and a gradual tourism recovery amid high travel costs.
Financial account inflows are forecast at $9.8 billion this year, down from $12.9 billion, and $10.6 billion next year, lower than the prior $13.8 billion estimate. Tighter global liquidity, higher‑for‑longer interest rates, and increased investor selectivity are moderating inflows.
Foreign direct investment inflows are projected at $7 billion for 2026, reduced from $7.5 billion, while the 2027 estimate remains at $8 billion. Net foreign portfolio inflows could reach $1.8 billion, down from $3.7 billion, with a 2027 forecast of $3.3 billion, lower than the previous $4.1 billion.
Recovery in capital inflows is expected to be gradual and uneven, supported by improving global conditions and structural catalysts such as bond‑index inclusion and sectoral investment pipelines.
Gross international reserves are now forecast at $104 billion for 2026, revised down from $111 billion, and $105 billion for 2027, below the earlier $112 billion estimate.
