By Luisa Maria Jacinta C. Jocson, A reporter
BANGKO SENTRAL ng Pilipinas (BSP) expects the country’s balance of payments (BoP) position to post more surpluses this year, but also expects a wider current accountfsnow.
In a statement on Friday, the central bank said it had raised its BoP forecast amid “decreasing global and domestic economic growth prospectsftrade, and bankruptcy of world commerce.”
The latest BSP projections show that the BoP will register more than $2.3 billion, equivalent to 0.5% of the gross domestic product (GDP). per year, above its previous projection of 1.6 billion dollars (0.3% of GDP).
BoP provides an overview of the country’s global trade. Surplus indicates that more money has entered the economy, while defThis shows that there is more money left.
“Based on what was said above and indeed figures engraved on fIn the first half of 2024, the BoP position as a whole is expected to register a higher surplus compared to the previous round of projections for this year and next,” the central bank said.
The latest BSP data showed that the country’s BoP level in the January-August period stood at $1.6-billion surplus, lower than last year’s $2.1-billion surplus.
“Currently, the Philippine economy appears to be maintaining its growth momentum, supported by strong, low domestic demandftrack, and timely passing of the national budget,” said the BSP.
It also noted that the improved BoP situation is driven by the government’s continued efimproving the business environment by integrating infrastructure development and implementing reforms to promote investment.
The Philippine economy grew 6.3% in the second quarter, the fastest since 6.4%. in the first half of 2023.
In the first half of the year, GDP reached 6%. The government aims to grow by 6-7% this year.
Meanwhile, the BSP said risks from the BoP outlook “remain broadly moderate.”
“On the negative side, commodity price volatility due to extreme weather and extreme weather events, trade tensions, and potential movement risks due to the emergence/resurgence of highly contagious diseases (e.g. ” said.
Next year, the BSP expects the BoP surplus to reach $1.7 billion, equivalent to 0.3% of GDP.
“By 2025, the overall BoP situation is likely to reach a surplus compared to previous projection work, and netfa decline from the financial account which continues to make a significant contribution and a reduction in the current account deficit.”
The BoP outlook for next year is driven by expectations of continued global demand and trade activity, the BSP said.
“While there are reasons to be optimistic about the BoP outlook next year, the analysis remains subject to potential risks of market volatility and rising geopolitical and geoeconomic risks including economic conflicts in the Middle East and US-China trade tensions.”
CURRENT ACCOUNT FAILURE
Meanwhile, the central bank now produces a current account defit amounts to $6.8 billion, equivalent to -1.5% of GDP.
This is wider than its previous forecast of $4.7 billion (-1% of GDP). The current account includes transactions involving goods, services and income.
By 2025, the BSP expects the current account defreaching $5.5 billion (-1.1% of GDP), which is also greater than $2 billion (-0.4% of GDP) previously.
Of ffirst half, current account deficit stood at $7.1 billion, accounting for 3.2% of GDP.
“A comprehensive current account defThis happened in 2024 due to the decline in the growth forecasts of goods and services exported,” said the BSP.
It lowered its 2024 forecast for exports to 4% from 5% but maintained its 6% estimate for next year.
The central bank said exports are expected to show “low performance.”
“The local semiconductor industry, with its heavy reliance on legacy products and downstream integration, does not appear to be benefiting from the AI-induced increase in global electronics demand,” BSP said.
“Partially offsetting the expected weakness in semiconductors are shipments of other electronic products (eg, electronic data processing, consumer electronics, telecommunications, medical/industrial equipment, and automotive electronics) that seem to be driven by the technology change cycle and all. recovery from global demand.”
The central bank kept its forecasts for consumer spending growth at 2% this year and 5% in 2025.
Meanwhile, the BSP expects exports to expand by 13% this year, which is much lower than the previous forecast of 14%. It kept its forecast for service shipments at 10% by 2025.
The central bank also kept its forecast for services exports at 13% this year and 6% next year.
“Growth in services exports is likely to be modest following the weaker-than-expected performance of the BPO sector due to lower receipts from other business services, particularly telecommunications centers,” it said.
“Nevertheless, the current account position continues to be supported by the prospects for strong growth in travel receipts, as well as continued inflows of overseas Filipinos. [worker] (OFW) remittance.”
BPO receipts growth forecast has been cut to 6% this year from 7%. It maintained its forecast for BPO revenue growth of 7% next year.
Meanwhile, the Bank has also maintained its monetary output forecasts at 3% this year and next.
In the first seven months, remittances from OFWs increased by 2.9% to $19.332 billion from $18.785 billion last year.
As for the financial account, it is expected to come outfthe decline could reach $10.5 billion this year, higher than the previous estimate of $7.7-billion withoutfdown.
I fFinancial account records of transactions between residents and non-residents including fassets and liabilities.
The outflow of the financial account reached $ 10.5 billion fFor the first semester, the latest data from BSP is shown.
“The high net went infless than fThe financial account is mainly caused by a significant increase in portfolio investment driven, in turn, by strong growth prospects globally and domestically, which will also benefit from indicators of a change in the monetary policy stance in the easing of the US Fed,” the BSP. said.
“These factors should continue to push higher levels of both foreign direct investment (FDI) and foreign portfolio investment (FPI) for the remainder of the year,” it added.
The BSP also raised its net FDI forecastfit dropped to $10 billion this year from $9.5 billion.
The latest central bank data shows that FDI inflows increased by 7.9% year-on-year to $4.4 billion fthe first half of the year.
The central bank also raised its estimate of net FPI inflows to $4.2 billion this year, from $3.1 billion. Short-term foreign investment has been very profitablefless than $1.46 billion in fin the first seven months, it increased by 830.7% from last year.
Gross international reserves (GIR) are expected to reach $106 billion this year, higher than the previous forecast of $104 billion.
Dollar reserves rose 7.39% year-on-year to $106.92 billion as of the end of August.
“Given the possibility of continued foreign exchangefis low in the economy, there is a chance to expect more construction in the GIR of 2024-2025,” added the BSP.
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