Philippines posts widest-ever Q1 BOP deficit at $5.3 billion
Analyst says 'not a red flag'
By Derco Rosal
Published Apr 20, 2026 02:58 pm
At A Glance
- Successive and increasingly large monthly balance of payments (BOP) deficits pushed the end-March deficit to a total of $5.3 billion—its widest year-to-date gap on record.
Successive and increasingly large monthly balance of payments (BOP) deficits pushed the end-March deficit to a total of $5.29 billion—its widest year-to-date gap on record.
This three-month total is already approaching the $5.66-billion full-year deficit recorded last year, according to the latest data released by the Bangko Sentral ng Pilipinas (BSP) on Monday, April 20.
The BOP is a summary of a country’s transactions with the rest of the world, including trade, investments, and financial flows. A deficit occurs when total outflows exceed inflows over a given period, meaning more foreign exchange (forex) leaves the country than enters it.
For March alone, the BOP deficit amounted to $2.64 billion, emerging as the widest in more than a year since January 2025’s $4.1-billion deficit. The BOP deficit in March further widened from the $1.97 billion recorded in the same month last year.
To recall, the local stock market was hit hard, while the Philippine peso weakened to record lows in March amid the Middle East conflict, as investors moved toward safe-haven assets in global markets.
BSP data indicate that while the $373-million BOP deficit last January was significantly narrower than a year ago, the deficit widened in February to $2.28 billion and further last month.
This performance followed a volatile 2025, during which the full-year BOP reflected a sharp reversal from the $609-million surplus seen in 2024.
Based on the central bank’s latest forecast, the full-year 2026 deficit would reach $7.8 billion, wider than both the end-2025 deficit and its earlier forecast of a $5.9 billion.
Consequently, the country’s gross international reserves (GIR), or United States (US) dollar stock, decreased to $106.6 billion as of end-March. This is a notable decline from the $113.3 billion reported in February.
According to the BSP, the end-March level of reserves remains an adequate external liquidity buffer, equivalent to seven 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.
Robert Dan Roces, group economist at SM Investments Corp. (SMIC), said the wider BOP deficit could be attributed to the “still-elevated trade gap—imports holding up on strong domestic demand—now compounded by higher oil prices and tighter global liquidity.”
He said higher US interest rates are dampening portfolio inflows, while geopolitical risks are increasing import costs and risk premiums.
“A return to surplus this year looks unlikely; the more realistic path is a narrower but manageable deficit, with improvement hinging on lower oil prices, easing global rates, and steady inflows from remittances, business process outsourcing (BPO), and foreign direct investments (FDIs),” the economist asserted.
Meanwhile, Roces noted that the current deficit level remains “not a red flag,” as it reflects active investment and expansion in the Philippine economy, with import demand driven by growth and capacity-building.
Roces added that it remains sustainable as long as core inflows and reserves are maintained.