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By Maricel E. Burgonio Reporter
The country is seen to incur a
trade deficit this year, the Bangko Sentral ng Pilipinas (BSP) said
Monday.
Based on its recent economic
assumptions, the BSP said a trade deficit of $6.9 billion will
result from lower exports of $49.9 billion this year as against
imports of $56.8 billion.
The BSP downgraded its
assumptions for exports and imports growth to 8 percent and 7
percent, respectively, from earlier estimates of 11 percent and 10
percent.
The deficit however will be
offset by dollar inflows from remittances of overseas Filipino
workers and foreign investments, so the country would still end the
year with a balance of payments (BOP) surplus.
The BSP upgraded its BOP forecast
to $6.3 billion from $2.9 billion this year due to strong remittance
and investments inflows.
Remittances are seen to reach
$14.739 million this year. Of this, $14 million will come from banks
and other official channels and $739 million from unofficial
channels. In the first half of the year, remittances amounted to $7
billion.
Portfolio investments are
expected to reach $3.7 million this year from $3.2 million earlier.
Net foreign direct investments would reach $2.3 billion from $2.2
billion earlier.
The central bank also maintained
its peso assumption of 46 to 48 against a dollar this year as well
as its inflation assumption of between 2.6 percent to 3.1 percent.
“A lower inflation
benefits everybody including exporters, particularly the domestic
cost of production. At the same time, we put up an exports fund
aimed at improving their capacity of the export sector. The
government has reduced the some of the fees and charges,” BSP
Governor Amando M. Tetangco Jr., said.
Due to a strong peso, the BSP has
made a total of $805-million loan prepayments so far this year.
The Department of Finance is also
looking at their existing contracts for possible prepayments of
obligations.
Traders see the peso appreciating
against the dollar due to the expected US Federal Reserve cut in its
federal funds rate in September 18.
“The market is already
discounting the expected US Fed rate cut but the BSP might not
follow that,” Marcelo Ayes, Rizal Commercial Banking Corp.
vice-president said in a phone interview.
At the Philippine Dealing System,
the peso depreciated to 46.570 on Monday from 46.550 last Friday.
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