Fitch Solutions’ unit BMI has forecast a worsening current account deficit of the Philippines due to serious impacts of global trade fragmentation on the country’s exports.

“We now expect the Philippines’ external position to deteriorate as trade fragmentation and its knock-on effects on global demand will weigh heavily on exports,” the BMI said in a report published last Friday, Aug. 15.

According to the data from the Bangko Sentral ng Pilipinas (BSP), the current account deficit widened to 3.7 percent of economic output in the first quarter of 2025, higher than the 1.9 percent in the same period last year.

“We expect this to persist in the medium term,” the report read, noting that in its forecast, the current account deficit would average 2.8 percent of gross domestic product (GDP) over the next three years.

“This outlook is hardly surprising, given that key trading partners are facing mounting challenges,” BMI said. The current account or net dollar earnings covers goods, services, as well as income from Filipinos working abroad, and other sources.

Relative to the previous years’ average, it would significantly widen from the 0.4 percent average over 2015-2019.

Still “high interest rates and growing policy uncertainty” would lead to slower growth in the country’s exports to the United States (US) to 1.7 percent this year from 2.8 percent last year. Exports to the US currently account for 16 percent of the country’s total shipments.

BMI also noted that China is still facing a prolonged property slump that is weighing on household wealth and consumer spending. As such, BMI said it expects China’s real GDP growth to moderate from five percent last year to 4.8 percent this year, and further to 4.2 percent next year.

“Beyond the two economic giants, the global trade landscape is clouded by a rise in US tariffs, which we think will impact the global economy more negatively in the coming years,” BMI said.

BMI noted that the Philippines relies heavily on business process outsourcing (BPO), which accounts for a 15-percent share of the global market and 7.5 percent of the local economy. “This makes it highly exposed to a weak global services environment,” it said.

It also said remittances are projected to moderate, explaining that remittance growth typically follows the economic condition of countries where overseas Filipinos (OFs) work.

Using a weighted average of nominal GDP growth from the country’s top five remittance sources, BMI expects remittance growth to be “softer” in 2025 compared to 2024.

Forty percent of the money sent in from abroad was from the US, seven percent from Singapore, 6.2 percent from Saudi Arabia, five percent from Japan, and 4.7 percent from the United Kingdom (UK).