A truck is loaded with a container at the Manila International Container Terminal at the Port of Manila in Manila, Philippines, Aug. 11, 2025. REUTERS/Eloisa Lopez

By Justine Irish D. Tabile, Senior Reporter

THE Philippines’ balance of payments (BoP) deficit widened in March, driven by the elevated trade gap and heightened geopolitical uncertainty, Bangko Sentral ng Pilipinas (BSP) data showed on Monday.

The country’s BoP position stood at a $2.637-billion deficit last month, ballooning from the $1.966-billion gap in the same month in 2025 and the $2.277-billion gap in February.

March marked the fifth straight month that the country’s BoP position was in a deficit. It was the largest BoP deficit in 14 months or since the $4.078-billion gap recorded in January 2025.

This brought the three-month BoP deficit to $5.288 billion from the $2.958-billion gap a year ago.

The BoP refers to the country’s economic transactions with other nations. A surplus indicates more funds entered the country, while a deficit shows that the country spent more than it received.

“The wider BoP deficit is largely a function of a still-elevated trade gap — imports holding up on strong domestic demand — now compounded by higher oil prices and tighter global liquidity,” said Robert Dan J. Roces, group economist at SM Investments Corp. (SMIC), in a Viber message.

“Elevated US rates are dampening portfolio inflows, while geopolitical risks are pushing up the import bill and risk premia,” he added.

Preliminary data from the Philippine Statistics Authority (PSA) showed that the trade-in-goods deficit widened to $3.68 billion in February from $2.99 billion a year earlier. The PSA is scheduled to release March trade data on May 30.

Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes said the BoP deficit widened because the country is paying more for imports, especially oil, while export and investment inflows are not growing fast enough.

“Global factors are mutually reinforcing. Oil prices widen the trade deficit. US rates reduce capital inflows. Geopolitics amplify both. Global slowdown weakens exports,” he said in a Facebook Messenger chat.

“So, when these factors move in the same direction, they create a compounded effect, making the BoP deficit widen more sharply than any single factor would cause on its own,” he added.

Rising oil prices and dwindling fuel reserves pushed the government to announce a one-year state of national energy emergency and suspend excise taxes on kerosene and liquefied petroleum gas.

SMIC’s Mr. Roces said the BoP position is highly unlikely to return to a surplus this year.

“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, and foreign direct investments,” he said.

“Importantly, a deficit at this stage is not a red flag — it reflects an economy investing and expanding, with import demand tied to growth and capacity-building and remains sustainable as long as core inflows and reserves stay intact,” he added.

Mr. Peña-Reyes said that it is possible to see the BoP position to swing to a surplus, but it is not the base case.

“Most official and market forecasts still point to a small BoP deficit in 2026, though with scope for improvement versus 2025 rather than a clean return to surplus,” he said.

“All told, the expected path is a narrowing deficit, not a full swing back into surplus,” he added.

For this year, the central bank expects the BoP position to end at a deficit of $7.8 billion or -1.5% of the country’s gross domestic product.

Last year, the BoP deficit stood at $5.661 billion, a reversal of the $609-million surplus recorded in 2024.

RESERVES
Meanwhile, the Philippines’ gross international reserves (GIR) declined to $106.6 billion as of end-March from $107.51 billion reported earlier by the central bank. It was also lower than the $113.26-billion GIR at the end of February.

“This level of reserves remains an adequate external liquidity buffer, equivalent to 7.0 months’ worth of imports of goods and payments of services and primary income,” the BSP said.

It also covers around 3.9 times the country’s short-term external debt based on residual maturity, it added.

GIR comprises foreign-denominated securities, foreign exchange, and other assets such as gold. It enables a country to finance imports and foreign debts, maintain the stability of its currency, and safeguard itself against global economic disruptions.

The BSP projects the Philippines’ dollar reserves to hit $111 billion by yearend.

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