BOP SURPLUS. Bangko Sentral ng Pilipinas Department of Economic Research Director Sittie Hannisha Butocan in a virtual briefing on Friday (June 14, 2024) says the Monetary Board approved the latest set of 2024 and 2025 balance of payments (BOP) projections during its meeting on June 13. Butocan said the new set of BOP projections incorporates the most recent data and developments. (Screenshot from BSP's Zoom meeting)
MANILA – The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) recently revised the balance of payments (BOP) projections for 2024 and 2025, noting that surpluses are now expected for both years.
The BOP is a summary of the economic transactions of a country with the rest of the world for a specific period.
In a virtual briefing on Friday, BSP Department of Economic Research Director Sittie Hannisha Butocan said the central bank expects the BOP to register a surplus of USD1.6 billion this year, up from the earlier forecast of
USD700 million.
"This is on the back of a lower current account deficit combined with higher non-resident investment inflows. The lower current account gap is anchored on the narrowing of the merchandise trade deficit as growth in goods imports is estimated to moderate to 2 percent due in part to the continued easing of international commodity prices," she said.
Butocan said goods export growth has been upgraded to 5 percent from the earlier 3 percent due to the better-than-expected outturn in the first quarter of this year on the back of the robust recovery in global electronics demand.
"Further supporting the current account is the sustained expansion of travel receipts at 40 percent although lower than the previous forecast of 50 percent due largely to base effects," she said.
Travel exports are also projected to surpass their pre-pandemic level of about USD10 billion to reach USD12 billion to USD13 billion this year.
The BSP also expects foreign direct investments (FDI) and foreign portfolio investments (FPI) to yield higher net inflows of USD9.5 billion and USD3.1 billion, respectively, for 2024.
"The United States, which is a key FDI source for the Philippines, is expected to post notable growth in 2024. Meanwhile, FPI should be bolstered by the expected doubling of planned equity issuances this year relative to last year," Butocan said.
For 2025, the overall BOP position is projected to reverse into a surplus.
Butocan noted that the BOP is expected to post a surplus of USD1.5 billion, a turnaround from the USD500 million deficit projection earlier.
"This assessment is based on a further improvement in the current account balance, as well as relatively higher financial account flows," she said.
The narrower current account gap was due to the sustained growth of goods exports at 6 percent combined with a lower growth forecast for imports at 5 percent.
Travel receipts will likely expand by 10 percent in 2025 as tourism activity returns to normal growth path while growth in Business Process Outsourcing (BPO) was estimated at 7 percent as the country continues to be an attractive IT-BPO destination.
Overseas Filipino remittances are projected to grow by 3 percent.
Non-resident investment flows, meanwhile, are expected to sustain gains, albeit modest, with investors anticipated to act with caution amid possible policy shifts as new political leaders in more than 50 economies are seated by next year.
"The latest BOP forecasts generally reflects an improvement from previous projection given recent upside surprises. Nonetheless, the emerging external outlook continue to take on a cautiously optimistic view given lingering uncertainties, particularly relating to geopolitical tensions and weather-related shocks, which could ignite fresh set of challenges, such as higher fuel prices and weaker market sentiment," Butocan said. (PNA)
