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Wider BoP surplus projected this year


Bangko Sentral ng Pilipinas (BSP) Department of Economic Research Director Dennis Lapid (left) and Monetary Policy Subsector Officer in Charge Redentor Paolo Alegre Jr. discuss the latest balance of payments outlook in a briefing in Manila on Dec. 13, 2019. (Photo by Mayvelin U. Caraballo)

THE Bangko Sentral ng Pilipinas (BSP) expects the country’s balance of payments (BoP) surplus to widen this year after taking the latest local and foreign developments into account.

In a briefing on Friday, officials announced that the surplus could expand to $4.8 billion this year from 2018’s $2.306-billion deficit.

The latest forecast is higher than the previous $3.7-billion surplus and is equivalent to 1.3 percent of gross domestic product (GDP).

The current account — a major component of the balance of payments — is expected to hit a $5.6-billion deficit this year, equivalent to 1.5 percent of GDP and narrower than the previously estimated $10.1-billion shortfall.

Financial account net inflows, meanwhile, were projected to reach $8.9 billion this year, narrower than the previous $12.3-billion forecast.

The financial account’s major components — foreign direct investments (FDI) and foreign portfolio investments (FPI or “hot money”) net inflows — were also adjusted to about $6.8 billion and $8 billion, respectively, from the earlier projections of $9 billion and $4 billion.

For 2020, the central bank projected the BoP surplus to narrow to $3 billion, or 0.7 percent of GDP.

The current account deficit is seen to widen to $8.4 billion, while financial account net inflows are expected to rise to $9.8 billion.

According to BSP Department of Economic Research Director Dennis Lapid, key considerations in the revised projections are the more subdued global economic growth outlook, softer global trade growth outlook, continued vulnerability of commodity prices to a larger-than-expected slowdown in global growth, and lingering uncertainty over the US-China trade war.

Also considered were the Federal Reserve’s expected pause in policy easing following cuts in 2019, continued uncertainty over Brexit, sustained capital inflows to emerging economies in 2019 and 2020, and continued favorable growth prospects for the Philippine economy.

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Today’s Front Page January 27, 2020

Today’s Front Page January 27, 2020