BSP hikes dollar deficit forecast for 2026
The Philippines is set to post a wider dollar deficit next year than what the Bangko Sentral ng Pilipinas (BSP) earlier projected, as softer inflows from tourism and foreign direct investment (FDI) combine with higher import-driven outflows.
Latest central bank projections show the country’s balance of payments—which tracks all foreign exchange inflows and outflows—swinging to a deficit of $5.9 billion next year, equivalent to 1.2 percent of gross domestic product (GDP). A deficit means dollar outflows exceed inflows.
That compares with the BSP’s earlier estimate of a $3.4 billion shortfall in 2026 or 0.6 percent of GDP. The central bank said this reflected “a continued current account shortfall arising from a sustained trade-in-goods gap and weaker services receipts.”
Even so, the revised forecast would mark a slight improvement from the estimated $6.2 billion deficit in 2025, equal to 1.3 percent of output.
Services export receipts are now expected to reach $54.7 billion next year, slightly below the previous projection of $55.2 billion.
Travel receipts were revised down to $9.4 billion from $9.7 billion, while the outlook for business process outsourcing (BPO) revenues was left unchanged at $35.2 billion.
Cash remittances from Filipinos overseas—a key source of foreign exchange for the consumption-driven economy— are projected to grow 3 percent year-on-year to $36.6 billion.
“Services export growth is projected to moderate due to higher costs relative to competitors in both the BPO (in terms of rental fees, utilities and wages) and tourism (meals and accommodation) sectors,” the central bank said.
“Meanwhile, overseas Filipino 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,” it added.
The biggest drag, however, is expected to come from job-generating foreign capital.
Net FDI inflows are now seen at $7.5 billion next year, down from the earlier forecast of $8 billion, due to “cautious market sentiment and heightened global financial volatility,” the BSP said.
By contrast, net inflows of foreign portfolio investment, which are channeled into local capital markets, are projected to rise to $5.6 billion, an improvement from the previous estimate of $5 billion.
The BSP said merchandise imports would continue to be the biggest driver of outflows next year, with inbound shipments seen reaching $130.2 billion from the earlier estimate of $126.4 billion.
That would continue to eclipse goods export sales, which are nevertheless expected to grow by 2 percent to $61.2 billion, better than the previous outlook of $56.2 billion in earnings.
Zooming out, the BSP said the updated BPO outlook would translate to gross international reserves of $110 billion next year, up from the old forecast of $106 billion and the estimated level of $109 billion for 2025.
