BofA sees wider PHL trade, current account deficits as consumption recovers

A REBOUND in domestic consumption could widen the Philippines' trade and current account deficits this year amid a surge in imports, Bank of America (BofA) Global Research said, which could increase foreign debt and weaken the peso if they run for far too long.

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"We see consumer confidence and consumption recovering further as inflation remains subdued and monetary authorities cut policy rates further," it said in a report. "We see one risk to the resurgent consumer — a rebound in imports of consumer goods that may widen the trade and current account deficit in 2025."

BofA expects the current account deficit to settle at 4% of economic output this year.

The current account deficit, which covers transactions involving goods, services and income, rose 41.4% to $17.5 billion last year from a year earlier, according to Philippine central bank data. This brought the current account to 3.8% of economic output from 2.8%.