The Philippines’ current account—a major component of the balance of payments (BOP)– posted a surplus of $3.3 billion in the first quarter on the back of a smaller trade gap and higher net receipts in the services, primary and secondary income accounts coupled with the narrowing of the trade-in-goods deficit.
In a press briefing on Friday, the Bangko Sentral ng Pilpinas (BSP) said the country’s current account in the first three months was up 121 percent compared to the $1.5 billion surplus recorded during the same period last year.
The current account consists of transactions in goods, services, primary income and secondary income, and measures the net transfer of real resources between the domestic economy and the rest of the world.
The BSP data showed that the trade-in-goods account—a measure that tracks import and export of goods—posted a narrower deficit of $4.7 billion in January to March 2015 compared with the $5.4 billion deficit seen a year earlier, as exports rose 2.5 percent while imports contracted by 3 percent during the period.
The net services receipts account, which measures production activity that changes the conditions of the consuming units or facilitates the exchange of products or financial assets, amounted to $2.5 billion, up 38.8 percent from the $1.8 billion net receipts posted at end-March 2014.
“The 38.8 percent growth was due largely to net receipts in technical, trade-related and other business services, and computer services. Export revenues in business process outsourcing services totaled $4.3 billion in the first quarter of 2015,” the BSP said.
Primary, secondary income growth
The primary income account, which shows flows for the use of labor and financial resources between resident and nonresident institutional units, recorded net receipts of $308 million in the first quarter, up more than four times the $66 million net payments recorded a year earlier.
“This was due largely to lower net payments of investment income on account of reduced net payments of dividends and reinvested earnings on foreign direct investments, along with the 6.4 percent increases in compensation inflows from resident overseas Filipino workers, which amounted to $1.9 billion,” the central bank explained.
Meanwhile, net receipts of the secondary income account—or current transfers between residents and nonresidents—increased by 2.8 percent to $5.2 billion, boosted by personal transfers which reached an aggregate $4.8 billion in the three-month period.
The BSP said the huge current account surplus in the three months to March pushed the country’s BOP position to a surplus of $877 million during the period, reversing the $4.5 billion deficit a year earlier.
Meanwhile, the central bank said other components of the BOP slowed during the period.
The capital account recorded net receipts of $22 million in January to March, down 12.9 percent from the $26 million posted a year earlier, as outflows arising from residents’ net acquisition of non-produced non-financial assets from non-residents were higher during the quarter.
The financial account registered a net outflow of $606 million in the quarter, lower than the $4.1 billion net outflow registered a year earlier.
“This was driven by the notable decline in net outflows of portfolio investments and other investments,” the BSP said.