Widening current account gap could weigh on peso'

The country's trade gap is expected to grow wider in the coming years as the government ramps up infrastructure spending, a trend that may put pressure on the peso even as the economy continues to expand, according to Deutsche Bank Research.

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In its latest Asia corporate newsletter, Deutsche Bank flagged the country's widening current account deficit as large-scale infrastructure projects drive a surge in imports of capital goods like machinery, steel and construction equipment.

"The Philippines' current account deficit has been widening on the back of improving infrastructure investments, which are, in turn, driving capital goods imports sharply higher," Deutsche Bank said.

The bank estimates the Philippines' current account deficit will reach three percent of gross domestic product (GDP) in 2025 and 2.7 percent in 2026, significantly higher than its neighbors in Southeast Asia.

By comparison, Indonesia's deficit is seen at 0.8 percent this year, while Malaysia and Thailand are expected to post surpluses.