BSP sees wider current account deficit on higher fuel prices

The Philippines is heading toward a wider current account deficit this year as higher fuel and commodity prices raise the import bill, according to the Bangko Sentral ng Pilipinas (BSP). For 2027, it now expects $19.4 billion, or 3.6 percent of GDP, down from $19.7 billion.

What a current account deficit measures

A current account deficit means the country spends more foreign currency than it earns. The measure tracks money flowing in and out through trade in goods and services, income earned across borders, and remittances from overseas Filipino workers.

Some shortfall is normal for a growing economy that imports heavily. Much of the country’s fuel comes from abroad, so higher pump prices send more dollars out of the country.

Fuel and imports drive the gap

The BSP called “elevated fuel and commodity prices” the principal driver. It now expects goods imports to grow 7 percent this year to $139.7 billion, up from the 4 percent, or $135.3 billion, in an earlier forecast. Imports rose 5.4 percent to $130.6 billion in 2025.

Goods exports are forecast to grow 6 percent to $67.2 billion, double the earlier 3 percent projection, with electronics leading the rebound. That remains well below the 15.2 percent growth recorded in 2025, and the BSP expects the electronics lift to moderate as global demand stays uneven.

Meanwhile, the trade deficit in goods and services is projected at $58.6 billion this year, wider than the June forecast of $56.7 billion.

Remittances fall short

Cash remittances from Overseas Filipino Workers (OFWs) are forecast to grow 2.7 percent this year to $36.6 billion, unchanged from the earlier projection and slower than the 3.3 percent growth recorded in 2025.

Services receipts and remittances support the external position, the BSP said, but they “are not sufficient to fully offset the trade-driven deficit.” Services exports are projected at $53.6 billion, up from $53 billion, and business process outsourcing (BPO) revenue is expected to grow 3 percent to $34.5 billion, faster than the earlier 2.5 percent forecast.

The BSP expects import growth to slow in the second half of the year as businesses and households adjust to weaker domestic activity and high inflation. It sees goods import growth easing to 3 percent in 2027, with imports at $143.9 billion.

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On the broader balance of payments, the BSP now projects a $9.2 billion deficit this year, or 1.8 percent of GDP, narrower than the $10.7 billion forecast in June. That measure records all the country’s transactions with the rest of the world, and it ended 2025 with a $5.7 billion deficit, reversing a $609 million surplus in 2024. For 2027, the BSP expects an $8.5 billion deficit, down from $11 billion.

Gross international reserves, the foreign currency the central bank holds as a buffer, are projected at $104 billion at the end of 2026 and $105 billion in 2027, unchanged from the earlier forecast. The BSP said it will stay above $100 billion in both years, “a critical buffer against external shocks.”

The central bank said the global backdrop remains weak, with subdued growth, geopolitical tensions, and high fuel and transport costs.