MANILA— The Bangko Sentral ng Pilipinas’ (BSP) policy-making Monetary Board (MB) has revised down the expected deficit in the country’s balance of payment (BOP) position for 2017 to USD1.4 billion from USD500 million last June.
In a briefing, BSP Deputy Governor Diwa Guinigundo said higher importation by the Philippines was the main factor for the revision of the BOP assumption.
“Because the economy continues to grow, imports have sustained their momentum, particularly on the imports of raw materials and intermediate products. In the sense, that actually contributed to the decline in the trade-in-goods position,” he said.
He, however, said that this factor is expected to be countered by the sustained robust growth of remittance inflows from Filipino workers overseas, the income of the business process outsourcing (BPO) sector, and other trade-in services.
The BSP on Friday released the third-quarter BOP figures, which showed a deficit of USD662 million, a turnaround from the previous quarter’s USD289 million surplus and year-ago’s USD1 billion surplus.
The central bank, in a statement, said the current account improved and registered a USD554 million in the third quarter this year from year-ago’s USD30 million deficit but it was not able to offset the large outflows in the financial account after some investors withdrew some of their portfolio investments.
For the whole of 2017, the financial account is seen to register a net outflow of USD500 million from USD800 million as of end-September this year.
The net outflow is “reflective of the anticipated higher net outflow of foreign portfolio investments following possible series of rate hikes by the US Federal Reserve, as well as the higher-than-expected prepayments down by both the public and private sectors”.
The current account is seen to register a USD1 billion deficit this year, about less than 0.1 percent of the gross domestic product (GDP), lower than the earlier projections of USD600 million “to reflect the improvement in the trade balance”.
Exports are seen to recover and grow by 11 percent this year, better than the earlier projection of 5 percent.
“This reflects the firm recovery in the global economy that has led to increased trade momentum since the second half of 2016 carrying on to 2017,” the BSP said.
Growth of imports is seen to remain steady at 10 percent “supported by the moderate increase in commodity prices and increased imports of raw materials, capital goods and consumer goods, in line with sustained strong domestic demand”.
For 2018, the BOP is seen to post a deficit of USD1 billion “brought about by the expected reversal to a small net inflow in the financial account” for this year.
Current account deficit is seen to increase to about USD0.7 billion because of expected robust growth of imports of goods while financial account is seen end of next year with a USD1 billion deficit.