Economist expects improved PH balance of payments in 2026
MANILA — Despite a wider balance of payments (BOP) deficit recorded in 2025, an economist expressed optimism that the Philippines’ external position will improve in 2026.
Figures released by the Bangko Sentral ng Pilipinas (BSP) on Monday showed the country posted a USD827 million BOP deficit in December 2025, widening from the USD225 million shortfall recorded in November. The December outcome brought the total BOP deficit for the year to USD5.7 billion.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the BOP—which reflects a country’s total economic transactions with the rest of the world over a given period—is expected to rebound this year despite the recent deterioration.
In a report, Ricafort attributed last year’s wider deficit to several factors, including a persistent trade gap, weather-related disruptions, and concerns linked to flood control corruption.
“For the coming months, BOP data would improve further if anti-corruption measures and other reform measures especially in further leveling up the country’s governance standards are taken seriously, just like 10-15 years ago, as these help further improve international investor sentiment/confidence on the country,” he said.
Ricafort also pointed to easing geopolitical risks in the Middle East—particularly reduced tensions between Israel and Iran—as another factor that could help support a BOP recovery.
An improvement in the BOP is likewise expected to strengthen the country’s gross international reserves (GIR), which stood at USD110.8 billion as of end-December.
The BSP said the current GIR level is sufficient to cover 7.4 months’ worth of imports of goods and services, exceeding the global benchmark of three to four months.
Ricafort said GIR levels could rise further on the back of government foreign borrowings, continued inflows of overseas Filipino workers’ remittances, revenues from the business process outsourcing sector, export growth, and tourism receipts.
He added that stronger BOP and GIR positions would help support the peso, shield the economy from speculative pressures, and reinforce the country’s external position—factors that help sustain the Philippines’ investment-grade credit ratings. (PNA)
