The Philippines’ balance of payments (BOP) deficit widened to a record $7.41 billion in the first four months of the year, driven by the persistent trade imbalance and volatile capital flows that have rapidly depleted the nation’s dollar reserves.

The cumulative four-month deficit has already surpassed the $5.66 billion full-year shortfall recorded in 2025, according to data released by the Bangko Sentral ng Pilipinas on Tuesday, May 19.

The rapid deterioration leaves the country highly exposed to external shocks, having already reached 95 percent of the central bank's full-year deficit forecast of $7.8 billion with eight months remaining in the year.

For April alone, the deficit narrowed to $2.1 billion from $2.6 billion in March, offering a brief respite from the aggressive outflows seen earlier in the year. The April gap was also leaner than the $2.56 billion deficit logged during the same month last year.

BSP data showed that the deficit has widened significantly since the start of the year. After a relatively narrow $373 million gap in January, the deficit expanded to $2.28 billion in February, reached a peak of $2.64 billion in March, and settled at $2.12 billion in April.

Consequently, the country’s gross international reserves (GIR) decreased to $104.3 billion as of end-April. This declined from the $106.6 billion reported in March and the $113.3 billion seen as recently as February.

According to the BSP, the end-April level of reserves remains a robust external liquidity buffer, equivalent to 6.9 months of imports and payments for services and primary income. It also provides coverage of about 3.8 times the country’s short-term external debt based on residual maturity.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said the wider year-to-date deficit reflects “persistent external pressures, particularly from the country’s large trade deficit amid strong import demand and softer exports.”

He, meanwhile, said the narrower gap in April alone reflects some normalization following recent outflows.

“While remittances and services continue to provide support, these have not been enough to offset the current account shortfall, with capital flows remaining sensitive to global conditions,” Asuncion said.

“Moving forward, the BOP is likely to stay under pressure, although we may see some moderation in the coming months as inflows stabilize and seasonal foreign exchange (forex) receipts improve,” the economist said.