With the Philippines twin deficits, an economist of Maybank said the Philippine government should prioritize projects under its massive infrastructure program.
During the 2019 economic outlook jointly hosted by Maybank Philippines Inc. and Maybank ATR Kim Eng in Makati City Tuesday, Dr. Chua Hak Bin, Maybank Global Thematic, Macro Economist, said the country’s rising deficit on trade and current account are risks for the economy.
Philippine Statistics Authority (PSA) data show that the country’s trade deficit last August rose to USD3.51 billion, up from the USD2.74 billion same month last year.
The trade deficit has been rising on account of the strong growth of imports, as domestic demand continues to be robust.
PSA data show that imports rose by 11 percent last August while exports increased by 3.1 percent.
In contrast, the Bangko Sentral ng Pilipinas’ (BSP) current account (CA) assumption for this year is a deficit of USD3.1 billion or about 0.9 percent of gross domestic product (GDP).
Bangko Sentral ng Pilipinas (BSP) data show that the country posted a CA deficit of USD2.518 billion, or about 0.8 percent of gross domestic product (GDP), in 2017. This is higher than the previous year’s USD1.199 billion deficit.
Chua said Philippines’ CA can be partly attributed to the “Build, Build, Build” program of the government.
He forecasts the CA gap to widen to about 3.5-4 percent of GDP in the third quarter this year. He said inflows from overseas Filipino workers (OFWs) allowed the CA to post surpluses from 2003-11 but this is no longer the case because of declining inflows coming from the Middle East.
And with the current government’s massive infrastructure program, Chua raised the need for it to prioritize projects, focusing on those that will have greater potential to raise, among others, tourism receipts and foreign exchange reserves.
The government has identified 75 priority infrastructure programs, most of which are roads, bridges and airports that are seen to help propel the economy, most especially in the far-flung communities of Mindanao.