Export woes seen worsening Philippines' external position

MANILA, Philippines — The country’s trade outlook is set to worsen, with the Philippines expected to keep running deficits as global economic headwinds weigh on exports, according to the BMI, a unit of the Fitch Group.

In a note to clients, the BMI said the country’s current account—the broadest measure of trade because it includes investments — will likely stay in deficit over the next five years.

That suggests Filipinos will continue importing more than they export, a trend that could keep the peso under pressure.

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The shortfall is projected to average 2.8 percent of gross domestic product (GDP), far wider than the 0.4 percent average recorded from 2015 to 2019.

That outlook is hardly surprising, the BMI noted, given mounting challenges faced by key trading partners.

Growth in the United States—the Philippines’ largest export market, accounting for 16 percent of total shipments—is forecast to slow to 1.7 percent in 2025 from 2.8 percent this year, amid high interest rates and political uncertainty.

Mainland China, another major market, is grappling with a prolonged property slump that has eroded household wealth and spending.

Its economy is expected to grow 5 percent in 2024, easing to 4.8 percent in 2025 and 4.2 percent in 2026.

“Beyond the two economic giants, the global trade landscape is clouded by a rise in U.S. tariffs, which we think will weigh more heavily on the global economy in the coming years,” the BMI said.

The current account tracks dollar flows from trade in goods, as well as trade in services like business process outsourcing or BPOs.

‘User of funds’

The gauge also covers Philippine investments abroad and remittances from Filipinos overseas.

If the current account balance is in deficit, the country is said to be a “user of funds” and is thus considered a net borrower from abroad in order to fill the shortage. In this case, the country invested more than what its national savings can finance.

The Philippines already feels the pressure.

Latest data from the Bangko Sentral ng Pilipinas showed the current account balance swung to a deficit of $4.2 billion in the first quarter, equivalent to 3.7 percent of GDP.

This brought the current account deficit-to-GDP ratio in the first three months near the 3.9-percent projection of the central bank for the whole of 2025.

Looking ahead, the BMI said that even the services sector could offer “little relief.”

It noted that the Philippines is a major player in global BPO, holding 15 percent of the global market share and contributing 7.5 percent to the domestic GDP.

This makes it highly exposed to a weak global services environment, it added.

Meanwhile, the BMI said it anticipates softer remittance growth in 2025 compared to 2024.

“Historically, remittance growth closely tracks economic conditions in key source countries,” it added. INQ

(2025/08/19-02:06)

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