Current account deficit seen widening further

The Philippines' external position is expected to weaken further in the coming years, as global trade headwinds continue to pressure exports, services and remittances, according to Fitch Solutions unit BMI Country Risk and Industry Research.

- KEISHA TA-ASAN

In a commentary, BMI said the Philippines' current account deficit is likely to remain elevated over the medium-term, averaging 2.8 percent of gross domestic product (GDP) in the next three years.

This is a sharp reversal of the pre-pandemic average deficit of just 0.4 percent of GDP from 2015 to 2019.

"The Philippine external sector is set to come under pressure over the medium-term as global trade headwinds mount. Consequently, we are forecasting wider current account deficits over the medium-term compared to its historical average," BMI said.

"We now expect the Philippines' external position to deteriorate as trade fragmentation and its knock-on effects on global demand will weigh heavily on exports," it added.