The Philippines’ balance of payments (BOP) and current account both registered deficits in the first quarter of 2025, data from the Bangko Sentral ng Pilipinas (BSP) showed over the weekend, driven by a widening trade gap.
The BOP, which tracks the country’s transactions with the rest of the world, recorded a $3-billion deficit in the first quarter of 2025. This marks a turnaround from the $238-million surplus seen in the same period last year, the BSP said.
“This was primarily driven by a wider deficit in the current account component, which covers goods, services, as well as income from overseas Filipino (OF) workers and other sources,” the central bank said in a statement.
The current account deficit in the first quarter of 2025 doubled to $4.2 billion from $2.1 billion in the first quarter of 2024. As a share of GDP, the deficit increased to 3.7 percent from 1.9 percent in the same period last year.
“This development reflected the widening merchandise trade gap, as import spending grew faster than export earnings,” the BSP said.
“The increase in the current-account deficit also resulted from the contraction of net revenues from trade in services due to lower transport services receipts and increased outbound travel spending,” it said.
However, this was “partially moderated by higher remittances from OFs,” the central bank added.
Partly offsetting the deficit was substantial inflows in the financial account, which comprises direct investments, portfolio investments and other forms of investment. The financial account posted net inflows of $6.7 billion in the first quarter of 2025, a 43.2-percent increase from $4.6 billion in the same period last year.
This was mainly due to a “notable increase in net inflows in the direct and other investment accounts, alongside sustained inflows in the portfolio investment account,” the BSP said.
The capital account recorded a surplus of $23 million in the first quarter of 2025, up 35.9 percent from $17 million in the first quarter of 2024. This was driven by gross disposals of non-produced non-financial assets amounting to $4 million, compared with $1 million in gross acquisitions during the first quarter of 2024.
The country’s gross international reserves (GIR) amounted to $106.7 billion as of end-March 2025, higher than the $104.1 billion level registered as of end-March 2024. The GIR are foreign assets held by the BSP, primarily in foreign-issued securities, gold, and foreign exchange.
In the first quarter of 2025, the peso averaged 57.97 to the U.S. dollar, appreciating 0.3 percent relative to an average of 58.15 in the fourth quarter of 2024.
However, on a year-on-year basis, the peso depreciated 3.5 percent from an average of 55.96 to the dollar in the first quarter of 2024.
The BSP noted that the peso “gained external price competitiveness against the baskets of currencies of major trading partners and trading partners in advanced and developing countries on a year-on-year basis as indicated by the decreases in real effective exchange rate indices.”
