The Market Monitor Minding the Nation's Business
The Bangko Sentral ng Pilipinas (BSP) has revised its projections for the country’s balance of payments (BOP) surplus for 2024 and 2025, signaling continued resilience in the nation’s external financial position despite ongoing global uncertainties.
The BOP, which tracks a country’s economic transactions with the rest of the world, is now expected to record a surplus of USD3.5 billion in 2024, an increase from the earlier forecast of USD2.3 billion. For 2025, the surplus is anticipated to reach USD2.1 billion, higher than the previous estimate of USD1.7 billion.
According to the BSP, these revised forecasts reflect an overall positive outlook supported by stable global and domestic economic conditions, easing inflation, and potential shifts in U.S. trade policies. However, the central bank also noted a deceleration in the surplus compared to the 2023 outcome, highlighting challenges such as geopolitical tensions and domestic economic adjustments.
The current account deficit is projected to widen to USD10.4 billion in 2024 from the earlier forecast of USD6.8 billion. This reflects weaker-than-expected growth in goods and services exports alongside higher anticipated imports of services.
Goods exports growth has been revised downward to 2%, driven by reduced demand for semiconductor products, copper, and bananas.
Services exports are also expected to grow at a slower pace of 8%, attributed to reduced revenue from business process outsourcing (BPO) and travel activities, alongside domestic constraints in adopting artificial intelligence and the delayed return of Chinese tourists.
Meanwhile, services imports are forecasted to grow at an accelerated rate of 19%.
In 2025, the current account deficit is expected to widen further to USD2.4 billion. Despite this, the overall BOP surplus is projected to remain positive, buoyed by sustained net inflows in the financial account and a potential recovery in global trade, spurred by moderating inflation and improving business activity.
The BSP anticipates notable increases in travel receipts, with growth projected at 15% in 2024 and 20% in 2025. BPO revenues are expected to grow by 5% in 2024 and 6% in 2025, while cash remittances are forecast to increase by 3% annually over the two years.
Foreign direct investments (FDI) net inflows are projected at USD9 billion in 2024 and USD10 billion in 2025, while portfolio investments, or “hot money,” are expected to reach USD6.3 billion in 2024 and USD3.1 billion in 2025.
The BSP also foresees a buildup in gross international reserves (GIR), with projections reaching USD109 billion in 2024 and USD110 billion in 2025, exceeding earlier estimates.
Despite the generally favorable outlook, the central bank warned of potential risks stemming from shifts in U.S. trade, investment, and migration policies, as well as uncertainties in the global economic landscape, which could impact the country’s external sector performance in the years ahead.