PH current account deficit doubled in Q1
The Philippines’ current account deficit doubled in the first quarter as dollar outflows from a fat import bill continued to beat earnings from exports.
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 $4.2 billion, equivalent to 3.7 percent of gross domestic product (GDP).
This was 105.1 percent bigger than the $2.1 billion current account gap recorded in the same period last year—back when the deficit accounted for 1.9 percent of GDP.
As it is, the current account deficit-to-GDP ratio in the first three months settled near the 3.9-percent projection of the central bank for the whole 2025.
“This development reflected the widening merchandise trade gap and the contraction of net receipts in trade in services,” the BSP said.
“However, this was partially moderated 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.
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 $16.8 billion more goods than they exported in the three months through March to meet the needs of a growing economy, 14.7 percent bigger than the year-ago trade deficit of $14.7 billion.
Net earnings from trade in services, meanwhile, fell by 9.3 percent to $3.3 billion
But these were offset by higher net receipts in the primary income, which included gains from Philippine investments offshore. This segment went up by 14.6 percent year-on-year to $1.5 billion.
Lastly, net receipts from the secondary income, which covers remittances, had risen by 1.7 percent to $7.7 billion.
Overall, the Philippines’ balance of payments position—a summary of the country’s transactions with the rest of the world during a certain period— registered a deficit of $3 billion in the first quarter, a turnaround from the $238 million surplus a year ago.
