Down 39% from June, down 58% from yr-earlier
THE Philippine balance of payments (BOP) remained positive in July, although narrower from both the year and the month earlier figures, which an analyst said was due to the trade deficit.
The central bank did not explain the thin payments surplus but highlighted how the latest data showed that a $2 billion payments surplus target for the year was still doable.
Data released by the Bangko Sentral ng Pilipinas (BSP) on Friday showed a BOP surplus of $215 million in July, 39 percent narrower than the $354 million a year earlier.
The July surplus was also thinner by 48 percent from the $418 million posted in June.
In the first seven months of 2016, the surplus stood at $848 million or 58 percent lower than the $2.03 billion a year earlier.
“The trade deficit undoubtedly took its toll on the BOP as we’ve run a substantial deficit in the early months of the year,” said Bank of the Philippine Islands associate economist Nicholas Antonio Mapa.
The Philippines incurred a trade deficit of $9.81 billion in the first five months of the year, nearly triple than the $3.33 billion a year earlier, according to the latest available data.
Imports in the five-month period surged by 18.2 percent to $31.89 billion from $26.97 billion year-on-year.
“Remittances also slowed on exchange rate nuances, with overseas Filipinos needing to send home less dollars to offset peso consumption with the peso weaker,” Mapa said.
On the whole, Mapa sees the country’s payments position posting a surplus as remittances and business process outsourcing (BPO) receipts offset the trade gap. Exports are likely to pickup toward the end of the year.
“But the resilient OFW [overseas Filipino workers]and BPO revenues supported by strong foreign direct and portfolio investments represent the underlying dynamics of the BOP surplus for the month and for the first seven months of 2016,” BSP Deputy Governor Diwa Guinigundo told reporters in a text message.
This was reflected in the BSP’s foreign exchange operations and investment as well as foreign exchange deposits by the national government with the BSP despite paying for debt service, he added.
“If this momentum continues with the seven-month cumulative surplus of $848 million, we expect that the $2 billion forecast for the entire year of 2016 is doable,” he said.
“This external payments surplus is the fundamental basis of the broadly stable exchange rate of the peso,” he also pointed out.
The BOP summarizes the country’s economic transactions with the rest of the world in a certain period. It consists of the current account, capital, and financial accounts.
The payments surplus last year reached $2.62 billion, a reversal from a $2.86 billion deficit in 2014.