BOP surplus seen vs deficit in 2025

Improvement in global trade is expected to spur inflows of funds this year but a deficit is expected next year as the government plans to boost infrastructure projects.

The Bangko Sentral ng Pilipinas on Friday shared near-term forecasts for the country’s balance of payments or BOP.

It involves all of the country’s international transactions or incomes and payments related to trade, investments in financial markets and real estate, and fund transfers.

BSP projects a surplus of $700 million this year from $400 million in the fourth quarter of 2023.

“The upside risks to global growth prospects for this year are emanating mainly from the recent upgrades in the growth forecasts for the United States, China, and the ASEAN bloc,” BSP director for economic research Sittie Hannisha Butocan said.

Product orders seen rising

With higher gross domestic product or GDP in these countries, she said the Philippines will likely receive more orders for goods and services as “spillover effects” of foreign economic growth.

“Demand for services-related transactions, particularly about travel and tourism, likewise continue to move towards surpassing the pre-pandemic levels beginning this year and is likely to maintain the same trend over the medium term,” Butocan said.

The BOP last year resulted in a surplus at $3.7 billion or a reversal of the $7.3 billion deficit in 2022.

The positive development was mainly driven by a higher surplus in financial account at $15.4 billion from $13.9 billion during the period.

Breaking down the financial accounts, income from direct and portfolio investments decreased but income from financial derivatives and other investments increased.

These were driven by “global economic slowdown” and “geopolitical tensions,” BSP senior director for economic statistics Redentor Paolo Alegre Jr. said.

However, Butocan said remittances from overseas Filipinos and revenues of business process outsourcing or BPO firms will continue to grow, while external demand for semiconductors and electronics will be stable.

“The lower current account deficit likewise considers waning pent-up demand and lingering upside risks to domestic inflation alongside the impact of monetary tightening which could dampen overall economic activity over the near term,” she said.