PH current account deficit widened in 2024
The Philippines posted its second largest current account deficit on record in 2024 as the country’s bloated import bill continued to drive dollar outflows, a development that added more pressure on the peso.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed the current account balance—the broadest measure of trade because it includes investments—swung to a deficit of $17.5 billion in 2024, equivalent to 3.8 percent of gross domestic product (GDP).
The shortfall was 41.4 percent bigger than the deficit in 2023, when the current account gap had stood at $12.4 billion or 2.8 percent of GDP.
The shortfall was so big that it breached the BSP’s forecast of a $10-billion current account gap for 2024.
At the same time, last year’s deficit was the second biggest on record behind 2022, when the shortfall had totaled $18.3 billion or approximately 4.5 percent of GDP.
“The higher current account deficit emanated from lower net receipts in trade in services and a higher deficit in trade in goods,” the BSP said.
“However, this was offset partly by higher net receipts in the primary and secondary income accounts,” it added.
The current account tracks dollar flows from trade in goods, as well as trade in services like business process outsourcing or BPOs. The gauge also covers Philippine investments abroad and remittances of Filipinos overseas.
More imports
If the current account balance is in deficit, the country is said to be a “user of funds” and thus, is considered as a net borrower from abroad in order to fill in the shortage. In this case, the country invested more than what its national savings can finance.
Dissecting the central bank’s report, Filipinos had imported $68.7 billion more goods than they exported last year to meet the needs of a growing economy, bigger than the 2023 trade deficit of $66 billion.
Net earnings from trade in services, meanwhile, fell to $14.6 billion from $18.2 billion previously.
BOP surplus
But these were offset by higher net receipts in the primary income, which included gains from Philippine investments offshore.
Figures showed this segment of the current account had recorded $5 billion in net receipts last year from $4.3 billion before.
Lastly, net receipts from the secondary income, which covers remittances, had climbed to $31.7 billion from $31.1 billion in the preceding year.
Overall, the Philippines’ balance of payments position —a summary of the country’s transactions with the rest of the world during a certain period—swung to a surplus of $609 million in 2024, smaller than the $3.7 billion windfall in 2023.
