Fitch-owned BMI Research expects the country’s current account surplus to grow to 3.4 percent of gross domestic product this year on strong services sector and better goods export.
The current account surplus stood at 2.8 percent of GDP in 2015.
“The Philippines’ overall trade balance deteriorated to a deficit equivalent to 5.8 percent of GDP in 2015, but we expect the account to stabilize in 2016 as services exports continue to experience strong growth and goods exports face a slightly less difficult external environment,” BMI said in a research note.
The think tank unit of the Fitch Group also noted additional support from remittances growth.
BMI pointed out that while remittance growth has stagnated over recent months, which is largely the result of a significant drop in remittances from the US, one surprising bright spot for the remittance story has been the Middle East.
The think tank stressed that total remittances continued their growth tear with a 38.2 percent year-on-year surge in January.
“Although many Middle Eastern economies have suffered as a result of the oil price collapse over the past two year, OFWs [overseas Filipino workers]are more geared toward domestic work than other highly remittance dependent countries such as Bangladesh and India, and these jobs are less leveraged to the oil economy,” it stated.
Furthermore, BMI said it expects oil prices to gradually recover over the coming years as the current supply glut dissipates, suggesting stabilization in the region’s economic outlook over the next few years.
“This bodes well for the continued growth of remittances from the Middle East, and we believe that the overall diversification of OFWs by geography will keep a floor under remittances over the long-term,” it said.