A wider current account deficit drove the Philippines’ balance of payments (BOP) position from a $238-million surplus in the first quarter of 2024 to a $3-billion deficit in the same period this year, according to the central bank.

For the January-to-March period, the country’s current account deficit doubled to $4.2 billion in 2025 from $2.1 billion a year earlier, the latest Bangko Sentral ng Pilipinas (BSP) data showed.

“This development reflected the widening merchandise trade gap, as import spending grew faster than export earnings,” the BSP said in a statement released on Friday, June 13. The current account—or net dollar earnings—component in the country’s BOP covers goods, services, as well as income from Filipinos working abroad, and other sources.

The Philippines is a net importer of the goods it consumes. Economists expect a surge of products coming from China—already the top source of Philippine imports for many years now—as Chinese exporters look for alternative markets other than the United States (US) amid renewed trade tensions between Beijing and Washington.

The central bank added that the bigger first-quarter current account deficit was also driven by lower earnings from services—which includes business process outsourcing (BPO)—as transport receipts declined while outbound travel expenses of Filipino tourists bloated.

This wider deficit translates into an increased share in the country’s gross domestic product (GDP). It climbed to 3.7 percent in the first quarter of 2025, from 1.9 percent in the same quarter a year ago.

Higher remittances from overseas Filipinos (OFs) had slightly offset further expansion of the deficit in net dollar earnings, according to the BSP.

The BSP had projected the current account deficit would further widen to $19.8 billion, or 3.9 percent of GDP, this year.

Last year, the deficit stood at $17.5 billion, or 3.8 percent of GDP—larger than the $12.4 billion, or 2.8 percent of GDP, in 2023.

The government had partly blamed the dismal 5.4-percent year-on-year GDP growth in the first quarter to the “very sharp increase in the trade deficit.”

Also, a wider current account deficit puts depreciation pressures on the Philippine peso.

Back in April, the World Bank said that the peso’s gains against the US dollar at the start of this year may be erased by the widening current account deficit amid declining net exports.

The peso averaged ₱57.97 against the US dollar in the first quarter, slightly stronger than the ₱58.15 recorded in the previous quarter.

But the local currency saw a 3.5-percent decline from ₱55.96 in the same period last year.

Still, the peso “gained external price competitiveness against the baskets of currencies of major trading partners and trading partners in advanced and developing countries on a year-on year basis as indicated by the decreases in real effective exchange rate (REER) indices,” the BSP said.

Meanwhile, the BOP’s capital account posted a $23-million surplus in the first quarter, rising 35.9 percent from $17 million a year earlier. This was due to $4 million in disposals of non-produced non-financial assets, versus $1 million in acquisitions in the same period last year.

Non-produced non-financial assets cover intellectual property (IP), including trademarks and copyrights.

The financial account generated $6.7 billion in net inflows, increasing by 43.2 percent from $4.6 billion a year ago. This was attributed to higher direct and other investment inflows, plus steady portfolio investments.

During the quarter, the country’s gross international reserves (GIR) or US dollar stock, reached $106.7 billion, higher by 2.5 percent than the $104.1 billion last year. GIR are foreign assets held by the BSP, mainly composed of foreign-issued securities, gold, and foreign exchange (forex).