BSP sees weaker dollar position ahead for PH
The Philippines is bracing for a weaker dollar position in 2025 and 2026 as “subdued” investor confidence due to global trade uncertainties threatens to reverse two straight years of surplus for the country.
Based on the latest projections of the Bangko Sentral ng Pilipinas (BSP), the country is expected to post a balance of payments (BOP) deficit of $4 billion in 2025, equivalent to 0.8 percent of gross domestic product (GDP).
The BOP is a summary of the country’s economic transactions with the rest of the world.
A BOP deficit means more dollars left the country than it earned during a period, thereby reducing its resources used to transact with other economies.
The new BOP outlook was a turnaround from the previous forecast of a $2.1-billion surplus for 2025.
If the new prediction comes to pass, it would be the first time in two years that the 12-month BOP tally would turn negative.
Market volatility
This projection, the BSP explained, foreshadowed a “weaker” external position for the Philippines, as the slew of tariff actions in the United States continued to spur market volatility and threaten to choke off global trade.
And the weakness might persist as the BOP is expected to swing to a bigger deficit of $4.3 billion by the end of 2026.
Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said the shift in the BSP’s outlook was in preparation for “a more cautious economic environment.”
“It’s important for businesses and investors to stay informed and adapt to these changes,” Ravelas said.
“Monitoring further updates from the BSP and other economic indicators will be crucial in navigating this uncertain period,” he added.
Dissecting the revised BOP outlook, the country’s current account balance—the broadest measure of trade because it includes investments—was forecast to post a bigger deficit of $19.8 billion this year, before bloating to $21.2 billion in 2026.
“Merchandise exports are anticipated to record modest growth in 2025 and 2026,” the BSP said. “Services exports are also seen to post a modest expansion given slower growth in BPO services.”
The financial account component of the BOP—which counts dollar flows from foreign direct investments and hot money—was expected to register inflows amounting to $16.2 billion in 2025 and a bigger $17.8 billion in 2026. The BSP said a slow easing cycle in the United States would limit capital flows to emerging market economies, including the Philippines.
All of this, in turn, would translate to gross international reserves of $105 billion both for this year and next.
