Despite easing in December, the Philippines’ full-year 2025 balance of payments (BOP) deficit widened to $5.66 billion, its largest in three years since 2022, and a sharp reversal from the $609-million surplus in 2024.

The latest data from the Bangko Sentral ng Pilipinas (BSP) released Monday night, Jan. 19, showed that the BOP, which reflects the country’s transactions with the rest of the world, posted its widest deficit since the $7.26 billion recorded in 2022.

This came despite the narrowing seen in December 2025 alone, as the monthly deficit dropped by 45.2 percent to $827 million from $1.51 billion in December 2024. It bears noting, however, that the December shortfall was the widest in eight months, since the $2.56 billion posted in April 2025.

Month-on-month, the end-December 2025 BOP deficit further widened from the $225-million deficit as of end-November.

Notably, the end-2025 deficit remained narrower than the central bank’s lowered forecast of $6.2 billion, from $6.9 billion earlier. The new forecast would translate to 1.3 percent of gross domestic product (GDP).

For 2026, the BSP projected the BOP to remain in deficit but narrower, at $5.9 billion, equivalent to 1.2 percent of output.

As of end-2025, the country’s United States (US) dollar stock, or gross international reserves (GIR), stood at $110.8 billion, 2.6 percent higher than $108.5 billion a year earlier.

According to the BSP, the current level of reserves remains sufficient to safeguard the country’s external liquidity, equal to 7.4 months of imports and payments for services and primary income. It also provides coverage of about 3.9 times the country’s short-term external debt based on residual maturity.

SM Investments Corp. (SMIC) group economist Robert Dan Roces said the wider deficit points to “decent domestic demand and investment pulling in imports faster than export earnings and inflows can keep pace.”

“It’s a growth-driven deficit rather than a stress signal,” Roces noted, adding that given ample reserves, the main concern now is “how quickly exports, tourism, and foreign direct investment (FDI) can catch up to a capital expenditure (capex)- and consumption-led expansion.”