The Philippines recorded a balance of payments deficit of $1.5bn in July, swinging from a $3.4bn surplus in June, Bangko Sentral ng Pilipinas (BSP) reported on August 19, The Manila Times reports.

The sharp reversal highlights the fragility of Southeast Asian external balances facing persistent import demands, capital outflows, and global market volatility.

The July figure compares with a $167mn deficit recorded in the same month last year. The latest shortfall brings the cumulative January–July balance of payments gap to $5.3bn, slightly narrower than the $5.8bn deficit recorded in the first half of 2023.

BSP attributed the seven-month deficit to a continued trade-in-goods deficit and net outflows from foreign portfolio investments. These outflows were partially offset by sustained net inflows from personal remittances of overseas Filipinos, government foreign borrowing, services trade, and foreign direct investment.

Gross international reserves (GIR) dropped to $103.3bn at the end of July from $104.7bn at the end of June, BSP added. The final figure sits just below the preliminary estimate of $103.4bn and marks the lowest reserve level in 18 months since January 2025's $103.27bn.

The central bank said the reserve decline was driven by net foreign exchange operations, government foreign currency debt service, valuation adjustments, and state foreign currency withdrawals. Profits from overseas investments and higher international gold valuations provided a partial buffer.

Despite the drop, BSP confirmed the current GIR level remains sufficient to cover 6.7 months’ worth of imports of goods and payments of services and primary income. The reserve buffer also covers about 3.7 times the country's short-term external debt based on residual maturity.