THE Bangko Sentral ng Pilipinas (BSP) said the Philippines’ external finances, or balance of payments (BOP), are expected to remain under pressure from 2026 to 2027 due to global uncertainties and rising costs.
The BOP is a measure of all money entering and leaving the country. It includes earnings from exports, remittances, and investments, versus spending on imports and travel. A deficit happens when more money goes out than comes in.
In a recent assessment, the central bank said slower global growth and weaker world trade are weighing on the country’s outlook. Ongoing tensions in the Middle East are also pushing oil prices higher, increasing costs for imports and businesses.
Despite these challenges, exports are still expected to grow, but at a slower pace. After strong growth in 2025, exports may expand by about three percent in 2026 and four percent in 2027. Electronics shipments are seen to remain strong due to demand for artificial intelligence-related products, electric vehicle parts, and data center equipment. Agricultural exports, such as coconut products, are also expected to support growth.
However, the BSP noted that local issues like high electricity costs, regulatory hurdles, and weak logistics continue to limit the country’s ability to expand production.
On the other hand, imports are projected to grow faster at 5 to 6 percent, mainly because of higher oil prices. Spending on foreign travel is also expected to rise, adding pressure to the country’s external accounts.
Non-trade income
To help offset these outflows, the Philippines will continue to rely on non-trade income. The IT and business process management (IT-BPM) sector is expected to grow by about four percent, although talent shortages and adjustments to artificial intelligence may slow expansion. Tourism earnings are also seen to grow modestly, while remittances from overseas Filipinos are projected to increase by around three percent.
Still, these inflows may not be enough to fully balance out the rising costs. The BSP expects the country’s current account deficit to widen to about four percent of gross domestic product (GDP) in 2026–2027. The overall BOP is also projected to remain in deficit at around 1.5 to 1.6 percent of GDP.
Despite this, the BSP said the situation remains manageable. Foreign investments and the country’s strong dollar reserves are expected to provide a buffer against external shocks.
The central bank added that adjustments are likely to be gradual, not sudden. However, it warned that the outlook may change depending on global developments, particularly the ongoing tensions in the Middle East. / KOC