Revising its narrower forecast earlier, the Bangko Sentral ng Pilipinas (BSP) now sees the Philippines’ balance of payments (BOP) deficit to widen this year and next year due to widening trade-in-goods gap.

As of September, the BSP is projecting the BOP hole to widen to 1.4 percent of the country’s gross domestic product (GDP) from the 1.3 percent deficit it had forecast in the second quarter of 2025.

This means that a 2.4 deficit in the first half at $5.6 billion is expected to increase to $6.9 billion by year-end, and from the $6.3-billion gap the central bank had earlier projected.

Likewise, the BSP has tweaked its projections for next year’s BOP deficit upward. It is now seeing this gap to widen to 0.6 percent of the economic output from its earlier projection of 0.5 percent of GDP.

“These reflect a widening trade-in-goods gap, subdued services receipts, and restrained capital inflows amid global uncertainty and shifting trade policies,” the BSP said in a statement released on Wednesday, Oct. 1.

In particular, the current account—measure of the country’s net dollar earnings from trade in goods and services and income from overseas Filipino workers—is expected to post a deficit of 3.3 percent of GDP by year-end, unchanged from the previous forecast.

However, it is seen to widen to 2.9 percent of GDP in 2026 from the BSP’s earlier projection of 2.5 percent

Services exports are the largest contributor to this, as it is slower growth this year at two percent from its earlier projection of six percent. For next year, its growth is seen to be sluggish at five percent from eight percent.

“Growth in services exports, particularly in business process outsourcing (BPO) and tourism, is expected to moderate as the sector contends with uncertainties surrounding US reshoring policies and weakening inbound travel,” the BSP said.

Services imports, meanwhile, are seen to expand by six percent, unchanged from the previous forecast. For next year, this seven-percent growth projection is tweaked downwards to six percent.

Meanwhile, goods exports are seen to expand by one percent in 2025 from an earlier forecast of one percent contraction. However, this growth is expected to move at a slower pace, to one percent in 2026 from two percent.

As for imports, the BSP retained its one-percent growth expectation for this year, but is expected to slow down to one percent from two percent in 2026.

“Goods exports and imports are anticipated to remain sluggish, shaped by softening global demand, easing commodity prices, and tempered domestic growth momentum,” the BSP said.

Investments in infrastructure, possible trade shifts, and moves to broaden export and import markets could help absorb external risks, the BSP said, but added that long-standing issues, such as poor logistics, labor skill gaps, and high production costs, still drag down export competitiveness.

Money sent in by Filipinos working and living abroad is expected to grow by three percent from 2.8 percent. The BSP retained its three-percent growth projection for next year.

Remittances are seen to stay strong as a major source of external support, backed by solid global labor demand and continued trust in formal transfer channels, even with the looming United States (US) remittance tax.

Additionally, foreign direct and portfolio investment inflows are also expected to slow starting in 2024 amid increased global financial volatility and more cautious investors.

Still, policy changes—such as the amended Investors’ Lease Act—are seen to improve the investment climate. Gross international reserves (GIR) or a country’s stock of US dollars, are expected to stay sufficient, offering a solid cushion for external liquidity needs even as global market conditions shift.