The Philippines’ current account deficit (CAD) expands to $4.25 billion in the first quarter The central bank said that in the larger trade gap.
Data from Bangkok Sentral Ng Pilipinas (BSP) showed that the current account deficit in the first quarter soared to $4.25 billion from $2.07 billion a year ago.
This raises CAD’s share as gross domestic product (GDP) to 3.7%, larger than 1.9% in the same quarter in 2024.
“This development reflects an increasing trade gap in goods, with import spending growing faster than export earnings,” BSP said in a statement on June 13.
“The increase in the current account deficit is also due to lower revenue from transportation services and increased spending on outbound travel,” the central bank said.
However, this part is subject to higher measures by overseas Filipino workers’ remittances.
During the January-March period, cash remittances rose 2.7% to $8.44 billion, while individual remittances rose 2.7% to $9.4 billion in the first quarter.
The central bank expects the current account deficit for transactions involving goods, services and revenues to reach $19.8 billion or -3.9% of economic output in 2025.
Trade in Services
BSP data shows that service trade revenue was $3.3 billion in the first quarter, down 9.3% from $3.7 billion in the same period last year.
This is because service exports fell 1.5% per year to $12.56 billion in the first quarter, while imports rose 1.7% to $8.92 billion.
“The decline in revenue is mainly due to lower revenues from transportation services (from $1.1 billion to $755 million) as well as technology, trade-related business services (from $5.5 billion to $5.4 billion),” BSP said.
Income from insurance and pension services fell 9.8% to $16 million, while construction companies fell 25.7% to $14 million.
On the other hand, export receipts for telecommunications, computers and information services rose 8.8% to $19.2 billion, while physical investments in manufacturing services owned by others rose 0.6% to $980 million, and up 0.2% to $2.89 million.
Revenues from financial services exports rose 72.6% to $128 million, personal, cultural, and entertainment services rose 5.3% to $63 million, and fees for using intellectual property surged 1469.5% to $8 million.
Revenue from technology, export of trade-related and other business services, and computer services including transactions related to business process outsourcing (BPO).
BSP estimates BPO export revenue, including computers and other commercial services, hit $7.2 billion in the first quarter, up 1.3% from $7.1 billion in the same period last year.
The service industry is the main growth driver of the Philippines economy.
Amid uncertainty in U.S. tariff policy, the broader current account deficit “reflects a largely wider trade deficit/net imports”, said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp.
Mr Ricafort pointed out that the Trump administration’s higher tariffs and trade wars could “slow growth in global trade, investment, employment and overall world GDP.”
The United States slapped the Philippines with a reciprocal tariff of 17%, but that continued until July. The 10% baseline tariff is still in effect.
“Although outbound goods are not exported, the expansion of the current account deficit is driven primarily by the ongoing trade deficit due to the growing volume of commodity imports,” said John Paolo R. Rivera, a senior researcher at the Philippine Development Institute, in a message from Viber.
As imports grew, the country’s transaction debt deficit grew from $14.7 billion to $16.8 billion in the first quarter, an increase of $16.8 billion.
But analysts warn that attacks between Israel and Iran will bring more uncertainty, especially in global crude oil prices.
“Israel-Iran is a source of uncertainty at a close to a four-month high in global crude oil prices, and the Philippines has imported almost all of its oil,” Rikaford said.
Mr Rivera said the current account deficit could swell in the short term if oil prices remain higher, or if the peso further weakens and makes imports more expensive.
He noted that steady growth in service revenue, remittances and BPO revenue may help relieve stress.
“The trajectory will depend on how external demand, import growth and how global trade terms, including the growing U.S.-China dynamic, work. The wider deficit, if not offset by stable financing inflows such as FDIS (Foreign Direct Investment) or portfolio investment, could increase pressure on PHP and FOREX (Foreign Exchange),” said Mr Rivera.
Meanwhile, primary revenue rose to $1.5 billion in the first quarter, up 14.6% from $1.3 billion in the same period last year.
Capital Account
Meanwhile, the capital account had a surplus in the first quarter (more than $17 million in the same period last year).
“The surplus is driven by the total disposal of non-productive non-financial assets, worth $4 million, compared with the total acquisitions in 2024 in Q1 were $1 million,” BSP said.
Net inflows in financial accounts in the first quarter were $6.7 billion, up 43.2% from the net inflows of $4.6 billion in the same period last year.
“This is mainly due to a significant increase in net inflows in direct and other investment accounts and continued inflows in portfolio investment accounts,” the central bank said.
Net inflows of direct investment soared 179.5% to $1.8 billion during the January-to-money period.
For portfolio investments, net inflows rose 0.4% in the first quarter to $978 million.
Meanwhile, net inflows of other investments rose 31.1% to $3.9 billion in the first quarter.
On the other hand, as of the end of 2025, the Philippines’ international reserves (GIR) reached US$106.7 million, up from US$104.1 billion in the same period a year ago.
“At this level, the reserves fully cover the value of 7.2 months of commodity imports and services and first-time income. This is also equivalent to 3.3 times the short-term foreign debt based on the country’s short-term foreign debt. Remaining maturity. “The central bank said.
The central bank pointed out that Jill is a foreign asset, mainly foreign-issued securities, gold and foreign exchange. – Alai
