BOP deficit narrowed in August despite Middle East woes
The Philippines’ dollar deficit narrowed in August despite continued volatility tied to the Middle East conflict, as resilient inflows from key sources like remittances may have helped offset the outflows.
The country’s balance of payments (BOP), a broad measure of money flowing into and out of the economy, registered a deficit of $596 million, the Bangko Sentral ng Pilipinas (BSP) reported.
The shortfall reflected foreign exchange outflows that outpaced inflows during the month. Even so, the latest BOP gap was smaller than the $1.5-billion deficit recorded in July, but still a reversal from the $359-million surplus recorded a year earlier.
This brought the January to August BOP position to a deficit of $5.9 billion. That’s more than half of the central bank’s estimate of a $10.7 billion BOP shortfall for the whole of 2026, which is equivalent to 2.1 percent of gross domestic product.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the latest results reflected continued trade deficit amid relatively higher global crude oil prices, as well as volatility in the global financial markets that stoked foreign portfolio investment outflows. Foreign debt payments made by the national government also contributed to the BOP shortfall, he added.
But those outflows were likely offset by continued growth in remittances from Filipinos abroad, as well as revenues from business process outsourcing industry and tourism, Ricafort said. Foreign direct investments also likely stayed resilient, he noted.
“For the coming months, the markets would anticipate developments related to developments on the war in the Middle East,” Ricafort said.
According to the BSP, the BOP results in August translated to gross international reserves (GIR) of $104.8 billion, up from July’s level of $103.3 billion. This is a sufficient buffer that can be used to meet the country’s import needs and pay its foreign debt obligations in the event of external economic shocks, the central bank said.
The latest GIR can cover up to 6.6 months’ worth of imports of goods and payments of services and primary income, above global adequacy standards. It can likewise service about 3.3 times the country’s short-term external debt based on residual maturity.
