The Philippine central bank has revised its projection for this year’s balance of payments to a surplus of $2 billion from a previous surplus forecast of $1 billion.
“This is due primarily to a sustained strong current account surplus following the downward revision in international oil prices, the Bangko Sentral ng Pilipinas (BSP) said in a statement released late Friday afternoon.
The new forecast also reflects the BSP’s confidence it could reverse the $2.9 billion deficit the country incurred in full-year 2014.
“The country’s external position remains a key source of resilience and policy flexibility that would enable the economy to ride out the volatilities of global economic and financial developments,” the statement said.
Gross reserves seen up at $81.6B
By year-end, gross international reserves (GIR) are expected to be around $81.6 billion, an improvement from the $79.5 billion posted in 2014, according to the new forecast.
“At this level, the GIR remains ample, covering 10 months’ worth of imports of goods and payments of services and income,” the BSP said.
The current account, which has been in positive territory since 2003, is projected to post a surplus of $14.2 billion, equivalent to 4.4 percent of gross domestic product (GDP). That will be “supported by strong overseas Filipino remittances, robust receipts from business process outsourcing (BP) and tourism, as well a narrowing merchandise trade deficit,” according to the BSP.
Goods exports are projected to rise by 5 percent, supported by the improvement in the outlook for electronics. Imports of goods are expected to expand by 1 percent, “bolstered by a robust outlook in domestic activity, even as the downward adjustment in the oil price assumption resulted in a lower import bill.”
The balance of the financial account is projected to post a lower outflow of $8.4 billion from $10.1 billion recorded in 2014.
Hot money net inflow seen
“While the global financial environment is expected to remain volatile, the continued bullish business confidence is expected to support higher foreign direct investments and modest inflows in portfolio investment.
The BSP forecasts that portfolio investment will reverse an outflow of $1.3 billion posted in 2014 to a modest inflow of $0.2 billion in 2015.
Monthly data recently released by the BSP showed the country’s BOP position yielded a surplus of $380 million in April, a turnaround from the $244 million deficit recorded in March.
The April surplus also reversed a $19 million deficit posted a year earlier.
Cumulative figures for the first four months of 2015 showed a $1.25 billion surplus, turning around a $4.49 billion deficit incurred in the corresponding period last year.
On May 19, when the BSP released the data for April showing a rebound in the BOP, it said it would raise its forecast for the surplus in 2015 from the $1 billion expected earlier.