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The country’s balance of payments (BoP) position swung to a USD 2-billion deficit in March, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

Central bank data showed the BoP posted a deficit of USD 1.97 billion in March, a reversal from the USD 3.09-billion surplus in February and the USD 1.17-billion surfeit in the same month a year ago.

The BoP measures the country’s transactions with the rest of the world. A deficit indicates more funds exited the Philippines while a surplus means more money entered the country than left.

“The BoP deficit reflected the National Government’s (NG) drawdowns on its foreign currency deposits with the BSP to meet its external debt obligations, as well as the BSP’s net foreign exchange operations,” the central bank said.

Latest data from the BSP showed the Philippines’ outstanding external debt rose by 9.8% to USD 137.63 billion as of end-December 2024 from a year prior.

This brought the external debt-to-gross domestic product (GDP) ratio to 29.8% at the end of 2024 from 28.7% at end-2023.

In the first quarter, the country’s BoP position registered a USD 2.96-billion deficit, also a reversal from the USD 238-million surplus in the same period a year ago.

“Based on preliminary data, the year-to-date deficit reflected mainly the widening trade in goods deficit,” the BSP said.

Latest data from the local statistics authority showed the trade-in-goods deficit widened by 4.6% to USD 8.28 billion in the January-February period from the USD 7.91-billion gap last year.

“This decline was partly muted, however, by the continued net inflows from personal remittances, foreign direct investments, and foreign borrowings by the NG,” it added.

At its end-March position, the BoP reflected a final gross international reserve (GIR) level of USD 106.7 billion, lower than USD 107.4 billion as of end-February.

Despite this, the BSP said the latest GIR provides a “robust external liquidity buffer.”

“Specifically, the latest GIR level ensures availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans,” it added.

The dollar reserves were enough to cover 3.6 times the country’s short-term external debt based on residual maturity.

It was also equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.

An ample level of foreign exchange buffers safeguards an economy from market volatility and is an assurance of the country’s capability to pay debt in the event of an economic downturn.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the shift to a deficit position is due to several factors, such as the wider trade deficit amid higher imports.

He also cited the “larger debt service payments, or forex (foreign exchange) operations by the BSP to manage (peso) volatility.”

“It’s also possible that earlier inflows such as borrowings, remittances, or investment-related receipts moderated in March,” Mr. Rivera said.

“This underscores the sensitivity of the Philippines’ external position to global market movements and domestic financing needs. Moving forward, careful management of external debt and trade competitiveness will be crucial to maintaining external stability.”

This year, the BSP expects the country’s BoP position to end at a USD 4-billion deficit, equivalent to -0.8% of gross domestic product.

In 2024, the BoP position stood at a surplus of USD 609 million, plunging by 83.4% from the USD 3.672-billion surplus as of end-2023.  – Luisa Maria Jacinta C. Jocson, Senior Reporter

Air passengers will have to pay higher terminal fees starting April 21 as the Civil Aviation Authority of the Philippines (CAAP) approved the collection of new passenger service charge (PSC) and other fees at its airports.

In Memorandum Circular 019-2025, CAAP Director General Raul L. Del Rosario said the PSC, also known as terminal fees, will be raised to PHP 900 (USD 17) for international flights from PHP 550 currently. This will be applied to air passengers departing from international airports as well as principal class 1 and 2 airports.

For domestic flights, the PSC is set at PHP 350 if the passenger is departing from an international airport. It is set at PHP 300 if departing from a principal class 1 airport; PHP 200 for those departing from a principal class 2 airport; and PHP 100 for those leaving via community airports.

The PSC for all domestic flight passengers is currently at PHP 200.

“Any passenger refusing or failing to pay the required passenger service charge shall be prevented from boarding the aircraft,” the circular stated.

However, children under two years old at the time of departure, transit passengers, and passengers who were denied entry do not have to pay the PSC.

Overseas Filipino workers departing via international flights are also exempted from the PSC.

In a statement, the CAAP said the increase in the decade-old PSC was primarily adjusted based on inflation from 2015 to present.

“The adjustment supports CAAP’s efforts to enhance passenger experience and improve airport facilities and operations,” it said.

The new fees will be implemented in CAAP-operated airports starting April 21.

Privately-operated airports such as Ninoy Aquino International Airport (NAIA), Mactan-Cebu International Airport, Clark International Airport, and Caticlan Airport will not be covered by the higher fees laid out in the circular.

New NAIA Infra Corp., which took over the operations of the country’s main gateway last year, will raise the PSC to PHP 950 for foreign departures and PHP 390 for domestic passengers in September this year.

Sought for comment, Nigel Paul C. Villarete, senior adviser on public-private partnerships at the technical advisory group Libra Konsult, Inc, said the increase in airport fees is appropriate and timely, noting that CAAP should have a more commercial approach towards aviation services.

“Airport services should not be subsidized, when airplane fares are not,” Mr. Villarete said in a Viber message on Monday.

“Airports should be empowered to be self-sufficient not only for operations but for future expansion as well,” he added.

Aside from terminal fees, CAAP set new landing and take-off fees that are based on the maximum take-off weight (MTOW) of the aircraft.

“Aircraft that operate at CAAP-operated airports shall be levied with appropriate fees and charges for the use of various facilities such as runways, taxiways, apron areas and lighting facilities,” the circular stated.

For international flights, the minimum fee is USD 260 for an aircraft weighing up to 50,000 kilograms.

For domestic flights, a minimum rate is PHP 54 per 500 kilograms for an aircraft weighing up to 50,000 kilograms.

Meanwhile, the CAAP circular also set “lighting charges,” which means an aircraft that lands and takes off between 6 p.m. and 6 a.m. will be imposed an additional 15% of the applicable landing and take-off charges.

An aircraft that parks between 6 p.m. and 6 a.m. will be imposed an additional 15% of applicable parking charges.

The CAAP also set aircraft parking fees, based on the maximum take-off weight and the number of hours parked.

For international flights, the first two hours are free, after which USD 30 is charged for the first 30 minutes. The subsequent rates ranging from USD 4.60 to USD 8.70 per half hour will depend on the aircraft’s MTOW.

Aircraft for domestic flights, on the other hand, will have one-hour free parking, after which the first half hour will be at PHP 364. Rates for the additional half-hour range from PHP 36 to PHP 97 depending on the MTOW.

The CAAP also imposed a “tacking” fee for aircraft using loading bridges. For international flights, the fee is USD 30 per tube per hour, while the rate is P1,300 per tube per hour for domestic flights.

The memorandum circular was signed on April 4 and submitted to the University of the Philippines Law Center on April 7. It will take effect 15 days after the publication in two newspapers. — A.E.O.Jose

cooling inflation drove domestic consumption. 

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort, said in an e-mail that first-quarter GDP likely expanded by 6.3%. 

He said he expected household spending to have grown by 5% in the first three months of 2025 versus 4.7% last year, supported by “benign” inflation.  

In the first quarter, inflation averaged 2.2%, well within the central bank’s 2-4% target range. 

Mr. Ricafort said consumption may have been driven by “among the strongest employment data in nearly 20 years, continued growth in overseas Filipino workers’ remittances, business process outsourcing revenues, [and] tourism receipts.” 

However, some analysts expect growth in the January-to-March period to settle below 6%. 

Moody’s Analytics economist Sarah Tan said the economy may have expanded by 5.5% in the first quarter. 

“Private consumption should lift 5.2% year on year, supported by lower borrowing costs as the effect of monetary policy easing filters through the economy. That will ease the pressure on household budgets,” Ms. Tan said in an e-mailed statement on April 11. 

The Bangko Sentral ng Pilipinas paused its easing cycle in February but cut rates by 25 basis points at the April 10 meeting. This brought the target reverse repurchase rate to 5.5% from 5.75% previously. 

Ser Percival K. Peña-Reyes, director of the Ateneo Center for Economic Research and Development, said in a Viber message that “construction, transport and storage, and accommodation and food service activities” likely drove GDP expansion to 5.4% in the first quarter. 

He said household consumption may have grown by 4.6% in the January-to-March period. 

Asked for the reason of a relatively slower GDP projection, Mr. Peña-Reyes said that elections no longer provide a significant boost to Philippine growth. 

Mr. Balisacan earlier said that election spending would likely be “muted” compared with previous elections as more candidates are allocating more of their campaign funds on social media ads.  

Tariff threat 

Meanwhile, the outlook for the second quarter may be clouded by the turmoil caused by US President Donald J. Trump’s tariff policies. 

Mr. Trump on April 9 paused the new reciprocal tariffs for 90 days, although the baseline 10% tariff on almost all US imports remained in effect. The Philippines faced a 17% reciprocal tariff, which was the second lowest among Southeast Asian countries. 

“The immediate risk to the outlook for the rest of 2025 will be slowing export growth due to the hike in US tariffs. These make the Philippines’ goods to the US more costly and less competitive, which is concerning because the US is the Philippines’ largest export destination,” Ms. Tan said. 

She also noted that escalating tensions between the US and its trading partners could dampen external demand for the country’s goods, potentially slowing production. 

“We expect the Philippines to expand 5.8% this year, but this could be revised lower should the heightened US-China trade war cause significant disruptions to the global economy,” Ms. Tan said. 

The Philippines exported USD12.14 billion worth of goods to the US in 2024. 

Mr. Ricafort said the easing inflation trend would justify further rate cuts “that would fundamentally lead to faster GDP than otherwise.” 

“However, offsetting risk factors include US President Trump’s higher US import tariffs, reciprocal tariffs, and other protectionist policies that could slightly reduce GDP growth starting the second quarter 2025,” Mr. Ricafort said.  

Despite the tariff threats, he said second-quarter growth could still reach 6%, driven by election spending. 

Ms. Tan anticipates an increase in government spending ahead of the midterm elections on May 12. 

Mr. Peña-Reyes said he sees the economy expanding by 5.9% in the second quarter, as well as the full year. 

Mr. Balisacan has said it may be too early to revise the full-year growth targets in the Development Budget Coordination Committee’s meeting in May. 

However, he said the upper end of the 6-8% target may be unrealistic to hit amid global uncertainty over the US tariff policy.  – Aubrey Rose A. Inosante, Reporter 

Shifting trade routes amid tit-for-tat tariffs would likely occur within Southeast Asia, Oxford Economics said, though this may not necessarily benefit the Philippines due to its poor logistics sector.

“The Philippines and Malaysia might also be able to capture some of the diverted trade flows looking to avoid ports with higher tariffs. They have the next two lowest tariff rates in the region, which are also below the global average of 27%,” it said at a research briefing.

“That said, the Philippines will probably not gain much from re-routing given its less developed trade logistics sector.”

In early April, US President Donald J. Trump announced higher reciprocal tariffs on most of its trading partners.

Southeast Asia was hit with some of the highest duties, though the Philippines was slapped with a 17% tariff, the second lowest in the region, just after Singapore.

However, Mr. Trump suspended the reciprocal tariffs for 90 days starting April 9 but implemented the 10% baseline tariff for all. The suspension would be lifted in July.

Oxford Economics said that the Association of Southeast Asian Nations (ASEAN) will likely undergo a “reordering of shipping routes” within the region.

“The ‘Liberation Day’ tariffs announced by US President Trump have been postponed. But they will have significant consequences for ASEAN if they are eventually implemented.”

“Given the extreme uncertainty, high fixed-asset investment costs, and the region’s strong labor cost advantages, we doubt ASEAN supply chains can adjust quickly,” it added.

Some businesses could opt to soften the impact of the higher tariffs by shifting production to locations slapped with lower tariffs.

“But not all businesses have diversified production bases and relocation costs are enormous. Also damaging is the hit from extreme trade policy uncertainty, which will lower business investment even if tariff hikes are eventually reduced or scrapped.”

“Lower-tariffed economies with transshipment capabilities could benefit. That said, a key risk is the potential for disruption to supply chains. A supply glut may arise as orders are canceled, while transportation capacity could also be strained.”

In the region, countries with the higher tariffs include Cambodia, Laos, Myanmar and Vietnam. Meanwhile, those that are “moderately exposed” to the US are Malaysia and Thailand.

“The relatively larger size of domestic spending in the Philippines buffers its economy against external volatility from an almost 20% export exposure to the US,” it added.

In 2024, the US was the top destination for Philippine exports, accounting for 17% of the total.

“Tariff rate differential considerations are key to production decisions. Companies with facilities in different economies could tap existing and available capacity in lower-tariff economies to fulfill production orders.”

However, the global economic advisory firm noted that not all companies have diversified production bases.

“Relocating or setting up new facilities typically involves significant fixed investment, even to lower-tariffed economies. The time needed to set up in new locations could stretch over several years, especially in sectors that require more complex facilities.”

Oxford Economics said the region’s “comparative advantage in the production of these goods should persist even with higher tariff rates.”

“This is particularly the case for lower value-added, labor-intensive manufacturing processes, such as the assembly of electricals or cut-and-trim processes for textiles, which some ASEAN economies dominate.”

“Given the labor-intensive nature of these processes, the large wage differential between the US and ASEAN economies is a core driver of the region’s competitive edge.”

In the medium term, Oxford Economics said it is unlikely that companies in ASEAN will reshore to the United States.

“Labor costs in the US are prohibitively high for the labor-intensive processes dominant in ASEAN. The region also benefits from economies of scales as an existing production hub.”

To cushion the impact of tariff hikes, ASEAN economies could consider lowering trade barriers on US goods.

“However, given the already low effective tariff on US goods relative to those imposed by the US, it’s unclear by how much these reciprocal tariffs will be lowered.”

ASEAN countries can also seek to ramp up US imports, it said.

“This was a method employed by China when Trump raised tariffs during his first term. However, it’s unlikely ASEAN will manage to do so in a manner that significantly reduces the US trade deficit.”

“The ASEAN consumer market is far smaller than that of the US given the sheer difference in income. This is also why we think the removal of what the US administration considers to be non-trade barriers isn’t likely to change much.”

Economies in the region can also invest more in the United States, it added.

“This approach is taken by Northeast Asian economies like South Korea. and Japan. But it’s probably not viable for ASEAN since most producers are foreign owned.” — Luisa Maria Jacinta C. Jocson

Money sent home by migrant Filipinos rose by 2.7% year on year in February, the slowest in nine months, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Cash remittances from overseas Filipino workers (OFWs) coursed through banks increased to USD 2.72 billion from USD 2.65 billion in the same month in 2024.

The growth in February remittances was slower than the 2.9% rise in January, and the slowest since the 2.5% growth in June 2024.

Cash remittances from land-based workers went up by 3% to USD 2.19 billion, while money sent home by sea-based workers inched up by 1.2% to USD 520 million

For the first two months of the year, cash remittances jumped by 2.8% to USD 5.63 billion, from USD 5.48 billion a year ago. The bulk came from land-based workers at USD 4.52 billion, up 3.2% from a year ago, while the rest came from sea-based workers at USD 1.11 billion, up 1% from a year ago.

“The growth in cash remittances from the United States, Saudi Arabia, Singapore, and the United Arab Emirates (UAE) mainly contributed to the increase in remittances in January-February 2025,” the BSP said.

The United States was the main source of cash remittances with a 40.9% share of the total so far this year. It was followed by Singapore (7.6%), Saudi Arabia (6%), Japan (5.2%), the United Kingdom (4.8%), the UAE (4%), Canada (3.2%), Taiwan (2.9%), Qatar (2.8%) and Hong Kong (2.6%).

Meanwhile, personal remittances, which include inflows in kind, rose by 2.6% to USD 3.02 billion in February from USD 2.95 billion a year ago.

Personal remittances from workers with contracts of one year or more increased by 2.8% to USD 2.37 billion in February, while those from workers with contracts of less than a year went up by 2% to USD 580 million.

In the January-February period, personal remittances grew by 2.7% to USD 6.27 billion from USD 6.1 billion a year earlier.

For the two-month period, personal remittances from workers with contracts of one year or more jumped by 2.9% to USD 4.89 billion, while those from workers with contracts of less than one year increased by 2.2% to USD 1.23 billion.

“The continued single-digit growth (in remittances) nevertheless is still a good signal/bright spot for the overall economy as an important growth driver, especially in terms of consumer spending, which accounts for nearly 75% of the Philippine economy,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

“The net increase in the US dollar versus the peso by about 12% over the past three years would require the sending of lower amount of remittances to pay for the amount of expenses in pesos but higher prices since 2022,” he added.

The peso strengthened by 37 centavos to close at PHP 57.995 per dollar on Feb. 28 from its PHP 58.365 finish on Jan. 31.

“The modest remittance growth reflects a mix of seasonal normalization after the holiday surge and the impact of forex dynamics, particularly the stronger PHP in that period, which may have affected remittance behavior,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message.

Mr. Rivera said slower global growth and “labor market adjustments” tempered the rise in remittances in February.

“Moving forward, remittances are likely to remain resilient, supported by stable overseas employment and the continued demand for OFWs. However, geopolitical risks, currency volatility, and potential slowdowns in advanced economies may keep growth moderate in the coming months,” he added.

The US government’s protectionist policies, as well as stricter immigration rules, may also weigh on remittances from US-based OFWs, Mr. Ricafort said.

“The Trump administration could tighten immigration rules in the US in an effort to create and protect more jobs for US citizens, thereby potentially slowing down OFW remittances from the US,” he said.

“Trump’s threats of higher tariffs/reciprocal tariffs and other America-first policies could also slow down global trade, investments, employment including some OFW jobs, and overall world economic/GDP growth, thereby also indirectly slowing down the growth in OFW remittances from other countries around the world.” — AMCS

THE Philippines is poised to become the second-fastest growing economy in the region this year, but the US tariff policy may drive gross domestic product (GDP) growth to below 6%, the ASEAN+3 Macroeconomic Research Office (AMRO) said.

“For now, our various scenarios of tariff actions, as per the ‘Liberation Day’ and ‘pause’ scenarios, growth in the Philippines will be negatively affected and likely will fall below 6%,” AMRO Group Head and Principal Economist Allen Ng said at a briefing.

US President Donald J. Trump announced higher reciprocal tariffs on most of its trading partners, with Southeast Asian countries slapped with some of the highest duties. Last week, he suspended the reciprocal tariffs for 90 days but implemented the 10% baseline tariff for all.

The Philippines is still facing US duties of 17% once the suspension is lifted in July, although this is the second lowest among Association of Southeast Asian Nations (ASEAN).

AMRO Chief Economist Hoe Ee Khor said the tariff impact on the Philippines will be “much lower.”

“The Philippines is a service-oriented economy. The manufacturing sector is less important… but it’s a much smaller share of the economy compared with the other ASEAN countries. So, because of that, I think the tariff impact on the Philippines will be much lower,” Mr. Khor said at a virtual briefing on Tuesday.

“We think that the Philippine economy generally will emerge from this tariff war quite well,” he added.

AMRO on Tuesday released its Regional Economic Outlook quarterly update, which includes forecasts finalized prior to Mr. Trump’s announcement of the “Liberation Day” tariffs on April 2.

In the report, the regional think tank said Philippine GDP is projected to expand by 6.3% this year, unchanged from the forecast in January. It is the second-fastest forecast among ASEAN, after Vietnam’s 6.5%.

For 2026, AMRO sees the Philippines growing by 6.3%, the fastest among ASEAN and slightly higher than Vietnam’s 6.2%.

AMRO’s baseline forecasts show Philippine growth will settle above the ASEAN average of 4.7% this year and 2026, driven by “robust domestic demand.”

“Growth is expected to ease in 2025-2026, following the strong export recovery in 2024. Indonesia, the Philippines, Vietnam, and Cambodia are projected to lead growth in the subregion, growing above the ASEAN average,” it said.

AMRO expects ASEAN+3 (including China, Hong Kong, Japan and South Korea) to grow by 4.2% this year and 4.1% in 2026.

“ASEAN+3 is set to remain a key driver of global growth in the medium term. The region is forecast to expand by an average of 4.3% in 2025-2030, outpacing global growth of 3.2%,” it said.

However, more aggressive protectionist policies from the US would hurt the region’s growth.

“The disorderly escalation of trade tension driven by erratic US trade policies could upend the anticipated steady growth path of the region,” it said.

AMRO said it will update the baseline forecasts in the coming months to reflect the impact of the US tariffs.

Weakest growth since COVID

Meanwhile, Mr. Trump’s global tariffs would cut Asia’s economic growth to the weakest since the COVID-19 pandemic, according to AMRO.

If America’s so-called reciprocal levies are implemented, growth across Asia would slow to 3.8% this year and 3.4% next year, AMRO said.

The 2025 estimate includes Mr. Trump’s “Liberation Day” charges on all nations that he subsequently paused, but not the recently announced temporary exemption for certain products including smartphones and electronics.

That forecast compares with a 4.2% baseline without tariffs and would mark the slowest pace of growth since it slumped to 3.3% in 2022.

While some countries may be hit harder given how much they rely on exports to the US — such as Vietnam and Cambodia — the region can mitigate the impact by easing monetary policy and boosting fiscal spending, according to the Singapore-based group.

“They’ll take policy responses to mitigate it,” said Mr. Khor. “The region is pretty resilient because they’ve accumulated reserves over the years and are more flexible in terms of the exchange rate,” he said, adding that inflation is tame, leaving space for central banks to cut policy rates.

Asia is set to be the hardest hit by Mr. Trump’s protectionist push, given the escalating charges on China and how integrated supply chains are across the region. Officials from Vietnam to Japan have been seeking exemptions and promising concessions across meetings with counterparts in the US.

Some central banks have already started cutting interest rates, flagging risks to the growth outlook, including the Reserve Bank of India last week, whose members signaled additional easing in coming months.

Meanwhile, the 145% levies announced this year on China and retaliatory duties on the US mean trade is set to plummet between the two nations.

That impact is likewise “manageable” for China since the nation’s share of exports to the US makes up a shrinking share of domestic GDP, according to AMRO. The bigger risk, meanwhile — that the two economies will fully decouple — isn’t likely, Mr. Khor said. “Decoupling is basically all imports and exports” down to zero, he said. “That’s an extreme scenario that won’t happen.”

If implemented, US tariffs on Asia would rise to an average 26% excluding China, according to AMRO. About 15% of the region’s total exports currently head to the US, accounting for about 4% of GDP. — ARAI with Bloomberg