BSP expects healthier BOP surplus in 2016

MANILA, Philippines – Despite recording a deficit in November, the Bangko Sentral ng Pilipinas (BSP) is looking forward to a healthier balance of payments (BOP) surplus next year as global growth and trade slowly rebound.

The country’s BOP surplus is expected to hit $2.2 billion (P104 billion) or 0.7% of gross domestic product (GDP) next year from the projected $2 billion or 0.6% this year, said Zeno Ronald Abenoja, director of the BSP’s Department of Economic Research.

The BOP is a summary of a country’s transactions globally over a specific period. It includes trade, foreign direct and portfolio investments, and remittances from abroad.

A surplus means more money flowed into the economy, providing liquidity.

Abenoja said the central bank is also looking at a lower current account (CA) surplus of $5.7 billion or 1.7% of GDP for next year, down from the revised $8.9 billion (P420.8 billion) or 3% figure announced earlier.

The change in figures was caused primarily by the slight dampening of the global growth outlook for 2016, although it remains higher than for 2015, Abenoja said, adding that the BSP also took the increase in international oil prices into consideration.

Other factors in the 2016 outlook include the easing volatility in global financial markets after the US Federal Reserve (US Fed) raised interest rates by 25 basis points and the continued favorable growth prospects for the domestic economy.

Deficit in November

Meanwhile, BSP Deputy Governor Diwa Guinigundo said in a briefing on Friday, December 19 that the country’s BOP position fell back into a deficit in November caused primarily by continued debt servicing which amounted to nearly $200 million.

The country recorded a BOP deficit of $141 million (P6.67 billion) for November, an about-face from the $469 million (P22.17 billion) surplus registered in October.

Last month’s deficit was also lower than the $314 million (P14.84 billion) deficit booked in November last year.

Guinigundo added that another factor was the heightened uncertainty in the markets regarding the impending US Fed interest rate hike which caused a decline in foreign portfolio investments.

Despite the November fall, the country’s year to date balance remains on target. 

The BOP surplus stood at $2.14 billion (P101 billion) from January to November this year, a reversal of the $3.72 billion (P175.90 billion) deficit booked during the same period last year.

It also surpassed the 2015 target of $2 billion (P94.57 billion) by August.

The country’s CA surplus, on the other hand, declined by 18.7% to $5.6 billion (P264.7 billion) in the first 9 months of the year from $6.8 billion (P321.5 billion) in the same period last year due to weak global trade.

Balance of trade in goods plunged 20.9% to $13.8 billion (P652.50 billion) in the first 9 months of the year from $11.40 billion (P539 billion) in the same period last year.

Services jumped 16% to $1.6 billion (P75.65 billion) from $1.4 billion (P66.19 billion). – Rappler.com

$1 = 47.29