Bangko Sentral ng Pilipinas expects twin external deficits to persist amid oil price pressures

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Philippines external deficits outlook

Highlights

Bangko Sentral ng Pilipinas forecasts a $9.2 billion balance of payments deficit in 2026 (1.8% of GDP), improving to $8.5 billion (1.6% of GDP) in 2027 amid ongoing external pressures.
The central bank raised its current account deficit forecast to $19.1 billion for 2026 and $19.4 billion for 2027, driven by wider trade gaps from elevated fuel and commodity prices.
Net foreign direct investment inflow forecasts were cut to $6.5 billion in 2026 and $7 billion in 2027, with gross international reserves held steady at $104–105 billion as a key financial buffer.

Central bank forecasts for 2026 and 2027

As reported by BusinessWorld Online, the Bangko Sentral ng Pilipinas said in a statement on Tuesday that the country’s balance of payments deficit is expected to reach $9.2 billion, or 1.8% of gross domestic product, in 2026, narrower than its earlier $10.7 billion forecast but wider than the $5.7 billion deficit recorded in 2025.

For 2027, the central bank sees the balance of payments gap easing to $8.5 billion, or 1.6% of GDP, compared with its previous estimate of $11 billion. It said the deficit is likely to persist in 2026 and 2027 as subdued global growth, geopolitical tensions, and elevated fuel and transport costs continue to strain the country’s external position.

The BSP also raised its current account deficit forecast to $19.1 billion, or 3.8% of GDP, for 2026 from an earlier $18 billion projection. For 2027, it expects the current account gap to widen further to $19.4 billion, or 3.6% of GDP.

The trade balance in goods and services is projected to post a $58.6 billion deficit this year, wider than the previous $56.7 billion estimate and the $53.8 billion gap recorded last year. That shortfall is expected to widen to $60.3 billion in 2027, with the BSP saying elevated fuel and commodity prices remain the principal driver even as import growth is expected to soften in the second half of 2026.

Trade, remittances and financing buffers

Goods exports are forecast to rise 6% year on year to $67.2 billion in 2026, led by electronics, before moderating to 4% growth and $69.9 billion in 2027. Goods imports, however, are expected to increase 7% to $139.7 billion this year before slowing to 3% growth and $143.9 billion next year.

Services exports are seen increasing 4% to $53.6 billion in 2026 and another 4% to $55.7 billion in 2027. The BSP also lifted its forecast for travel receipts growth to 5% this year and next year, while business process outsourcing revenue is expected to grow 3% to $34.5 billion in 2026 and $35.5 billion in 2027.

Cash remittances are projected to grow 2.7% to $36.6 billion this year and 3% to $37.7 billion next year, providing support to the external position alongside services income. Still, the central bank said inflows from services receipts and remittances are not enough to fully offset the trade-driven deficit.

On the financing side, financial account inflows are expected to reach $11.4 billion in 2026 and $11.8 billion in 2027. The BSP lowered its foreign direct investment net inflow forecast to $6.5 billion this year and $7 billion next year, while keeping gross international reserves unchanged at $104 billion for 2026 and $105 billion for 2027, which it said should remain a key buffer against external shocks.

Our earlier report on the Philippine Senate’s review of the proposed 2027 national budget explained how lawmakers planned to scrutinize alleged reallocations and assess whether funding was appropriately distributed across programs. It also outlined the hearing timeline and the role of budget watchdogs and civil society groups in flagging potential gaps and politically driven spending changes.

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