The Philippines' balance of payments (BOP) recorded a $1.508 billion deficit in December 2024, marking the third consecutive month of deficit. This reversal from the $642 million surplus in December 2023, brought the country's overall BOP surplus down to $609 million at the end of 2024.
The Philippines' balance of payments (BOP) recorded a $1.508 billion deficit in December 2024, marking the third consecutive month of deficit. This reversal from the $642 million surplus in December 2023, brought the country's overall BOP surplus down to $609 million at the end of 2024, compared to $2.117 billion as of the end of November 2024 and $3.672 billion surplus in 2023.
The Bangko Sentral ng Pilipinas (BSP) attributed the December 2024 deficit to its net foreign exchange operations and the national government's drawdown on its deposits with the BSP to settle foreign currency debt obligations. The BSP stated that the lower BOP surplus for 2024 was primarily driven by a wider trade in goods deficit, as well as reduced net receipts from trade in services and net foreign borrowings by the national government. However, this decline was partially offset by sustained net inflows from personal remittances, along with net foreign portfolio and direct investments. The outlook for the country's trade in goods deficit remains uncertain, particularly given the global trade landscape. University of the Philippines economist Dante B. Canlas expressed concerns that higher US tariffs on China, potentially impacting China's economic growth, could indirectly affect the Philippines, a major trading partner of China. This could result in a widening trade in goods deficit in the Philippines, subsequently leading to larger BOP deficits. Canlas further predicted that this development could influence inflation, prompting the BSP to reconsider its monetary easing efforts. He indicated that the BSP closely monitors domestic inflation and that if there are signs of an increase, interest rate easing might be postponed. Conversely, if inflation slows down, the BSP could potentially reduce interest rates. The December 2024 BOP deficit and the reduced BOP surplus for the entire year have also led to a decline in the country's Gross International Reserves (GIR). As of the end of December 2024, the GIR level stood at $106.3 billion, down from $108.5 billion at the end of November 2024. Despite this decrease, the BSP emphasized that the current GIR level still provides a more than adequate external liquidity buffer, equivalent to 7.5 months' worth of imports of goods and payments for services and primary income. Furthermore, the GIR is estimated to be 3.7 times the country's short-term external debt based on residual maturity
BALANCE OF PAYMENTS BOP DEFICIT GROSS INTERNATIONAL RESERVES GIR PHILIPPINE ECONOMY TRADE DEFICIT INFLATION US TARIFFS CHINA
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