The Philippines generated far more revenue than expense in the first six months this year as the country’s balance of payments (BOP) reverted into surplus of $2.3 billion from last year’s deficit of $3.1 billion.
The Bangko Sentral ng Pilipinas (BSP) traced the reversal to higher net receipts of trade in services and lower trade in goods shortfall in the current account and to higher net inflows from other investments in the financial account of the BOP.
The BOP in surplus essentially means the Philippines generated more from its dealings with the rest of the world than it had to spend for all those transactions, in US dollar terms.
But this balance is also forecast to end as a deficit this year and in 2024, albeit at a narrower shortfall than originally seen, mainly to the expected contraction in goods exports and goods import, the BSP said.
“Partly offsetting such outcome is the upward revision in services exports, bolstered by the higher growth forecast for travel receipts alongside expectations of sustained growth momentum of business process outsourcing (BPO) revenues. Meanwhile, forecasts for foreign direct investments (FDIs) and foreign portfolio investments (FPIs) have been adjusted downwards from the June projection exercise, after taking into account the actual data for the first half of the year as well as the latest global and domestic growth prospects,” the BSP said.
As a result, this year BOP was recalculated as a narrower deficit owing to a forecast narrower current account gap as both goods exports and imports were forecast to contract not just in the Philippines but across economies classed as emerging markets.
The BSP said the forecast on goods trade in the Philippines this year, which forms the bulk of the country’s exports, is seen as flattish as global commodities prices have slowed since the last forecast exercise was made.
“For 2024, the overall BOP is seen to pivot into a surplus position propped up by expectations of sustained improvements in the current account as well as the financial account,” the BSP said.
But while the narrative surrounding next year’s prospects remain broadly unchanged, the BSP is exercising vigilance as some risks may intensify: “Among these include possible tightening in financial conditions and worsening global trade imbalance which may complicate the already tight monetary and fiscal policy space of many economies.”
The BSP also reported on money sent home by overseas Filipinos totaling $20.91 billion in the first seven months or 2.5 percent higher than a year earlier when this totaled only $20.33 billion.
Of the amount, $2.99 billion were sent home through banks by both land- and sea-based overseas Filipinos.
