Pressures stemming from external conditions may have eased in January as the Philippines’ balance of payments (BOP) started 2026 with a significantly narrower deficit of $373 million.

This latest figure reflects a substantial improvement compared to the $4.08-billion BOP deficit recorded during the same month in 2025. It also followed the $5.66-billion end-2025 deficit—the largest full-year shortfall in three years.

Data from the Bangko Sentral ng Pilipinas (BSP) released on Thursday, Feb. 19, showed that while the end-2025 BOP deficit reflected a sharp reversal from end-2024’s $609-million surplus, the January 2026 gap continued to ease from the levels seen at the end of last year.

Specifically, January’s BOP deficit is approximately 54.9 percent lower than the $827-million deficit posted in December 2025. This narrowing follows a year in which the December gap had been the widest in eight months since April 2025.

Notably, the end-2025 deficit remained narrower than the BSP’s earlier lowered forecast of $6.2 billion, equivalent to 1.3 percent of gross domestic product (GDP).

For the remainder of 2026, the central bank previously projected BOP to stay in deficit but at a narrower level of $5.9 billion.

As of January, the country’s United States (US) dollar stock, or gross international reserves (GIR), rose to $112.6 billion, up from $110.8 billion at the end of 2025.

According to the BSP, the current level of reserves remains an adequate external liquidity buffer, equivalent to 7.5 months of imports and payments for services and primary income. It also provides coverage of about 4.1 times the country’s short-term external debt based on residual maturity.

SM Investments Corp. (SMIC) group economist Robert Dan J. Roces said last month’s narrower BOP deficit was mainly due to seasonally higher import payments and profit remittances early in the year, as well as portfolio adjustments amid uncertainty over global interest rates.

Roces noted that the narrower gap relative to the previous month implies that “external pressures have eased somewhat rather than worsened.”

He said the current deficit level is manageable and does not signal serious external vulnerability for the country.

For Roces, the trade deficit was likely the main drag, but this was partly offset by steady remittances and services inflows. He expects BOP to stabilize as remittance inflows rise and tourism receipts improve.

However, this outlook will be influenced by oil prices, electronics exports, and the direction of US borrowing costs.