The Bangko Sentral ng Pilipinas (BSP) has revised its balance of payments (BOP) forecasts for this year, seeing higher deficit of USD1.5 billion from its initial projection of USD1 billion.
In a statement, the BSP said even with the upward revision of deficit outlook, this remains a “very manageable external payments position”.
The new projection has factored in recent and prospective economic developments in domestic and global market.
The country’s current account at the end of this year is seen to register a higher deficit of USD3.1 billion or equivalent to 0.9 percent of gross domestic product (GDP). Initially, current account deficit is only projected at USD700 million.
“This mainly reflects the projected wider trade deficit as growth in goods imports largely outpaces exports growth,” the central bank explained.
BSP said imports of goods this year is expected to increase by 11 percent, sustaining the momentum of inward shipment of goods in the last quarter of 2017.
In a press briefing Thursday, BSP’s Department of Economic Statistics Head Redentor Paolo Alegre Jr. said the expansion of imports of goods in the first quarter of 2018 is boosted by the strong demand in goods -- particularly capital goods -- given the country’s economic growth.
“Goods imports are buoyed by the moderate increase in commodity prices, continued growth in imports of raw materials and manufactured goods, capital goods, and consumer goods, in line with sustained strong domestic demand,” the central bank noted.
Exports revenue is also expected to further recover this year, with growth seen at 10 percent due to “firm recovery of both advanced and emerging market economies”.
The BSP added that steady inflows of remittances from overseas Filipinos and revenues in the sectors of business process outsourcing (BPO) and tourism will back the current account for 2018.
Meanwhile, the central bank also made upward adjustment on the position of the country’s financial account, which is expected to record higher net inflow.
“Net inflows of FDI (foreign direct investments) in 2018 are projected to reach USD9.2 billion,” BSP noted. BSP initially forecasted net FDI inflows at USD8.2 billion.
Gross international reserve (GIR) outlook remains at USD80 billion, an ample level of external assets that can cover more than seven months’ worth of imports of goods and payments of services and income.