The Philippines’ current account deficit widened to $9.18 billion in the first half of 2025, a 13.6 percent increase from $8.08 billion in the same period a year earlier.

According to the latest data from the Bangko Sentral ng Pilipinas (BSP), the deficit was driven by imports outpacing exports to meet strong domestic demand.

The deficit, however, narrowed in the second quarter alone, falling 15.3 percent to $5 billion from $5.9 billion in the same period last year, a trend the BSP attributed to “increased trade in goods.”

The wider current account deficit, combined with lower net financial account inflows, contributed to the country’s overall balance of payments (BOP) reversing to a $5.6 billion deficit in the first half of the year, from a $1.4-billion surplus a year ago.

The current account, which measures the country’s net dollar earnings from trade in goods and services and income from overseas Filipino workers, posted a larger gap due to a widening trade in goods gap.

The trade deficit, indicating that the Philippines imported more goods than it exported, widened by 2.8 percent to $32.54 billion from $31.65 billion last year. This shortfall was compounded by a double-digit decline in services earnings, which fell from $6.31 billion to $5.49 billion.

The negative trend was partially offset by modest increases in net primary income, which rose to $2.47 billion from $2.23 billion, and net secondary income, which climbed 2.5 percent to $15.4 billion from $15.03 billion.

Net primary income refers to the difference between the country’s earnings from overseas—including wages of overseas Filipino workers (OFWs) and profits from local investments abroad—and its expenses, such as payments to foreign lenders.

Secondary income includes remittances from non-resident OFWs and other current transfers like gifts, grants, and donations.

The wider deficit’s share of the country’s gross domestic product (GDP) climbed to 3.9 percent in the first half of 2025, from 3.6 percent a year earlier. A current account deficit means the country is a net borrower from abroad to cover the shortfall.

Meanwhile, net inflows in the financial account fell to $8.67 billion from a $10.65 billion deficit in the same period last year. The decline was due to slower portfolio investments, primarily from residents placing funds in foreign debt papers, as well as a drop in other investment inflows.

On the other hand, the BOP’s capital account posted a $51-million surplus in the first half, rising 48.7 percent from $34 million a year earlier. This account, which covers capital transfers and the buying or selling of non-produced, non-financial assets, jumped to $55 million from $40 million a year ago.

The country's gross international reserves (GIR), or its US dollar stock, stood at $106 billion at the end of the first half, a 0.8 percent increase from $105.2 billion last year. The GIR consists of foreign assets held by the BSP, such as foreign-issued securities, gold, and foreign exchange (forex).