MANILA – The Bangko Sentral ng Pilipinas (BSP) expects a lower balance of payments (BOP) surplus for 2021 and next year amid current developments in the global and local markets.
“The latest BOP assessment for 2021 factors in pockets of optimism amid encouraging economic outturns in recent months on the one hand, and the continued high uncertainty from pandemic-related challenges on the other hand,” BSP Department of Economic Research managing director Zeno Ronald Abenoja said in a virtual press briefing on Friday.
The latest BOP surplus projection of the BSP for this year is at USD1.6 billion from a surplus outlook of USD4.1 billion announced in September.
The new BOP surplus projection is equivalent to 0.4 percent of the country’s gross domestic product (GDP).
“The narrower BOP surplus reflects the projected reversal of the current account into a deficit in 2021 of USD4 billion, -1 percent of GDP, from a surplus of USD3.5 billion or 0.9 percent of GDP in the previous projection arising from the foreseen further widening of the trade-in-goods deficit,” Abenoja said.
Meanwhile, while the outlook for merchandise exports remains rosy with a growth projection of 16 percent from the previous forecast of 14 percent, imports are expected to accelerate faster to 30 percent from the previous projection of 20 percent, he added.
Abenoja said exports, remittances, business process outsourcing (BPO) revenues, and foreign investments continue to support the BOP.
“The financial account is projected to post net inflows amounting to USD4.5 billion from the previously projected outflow of USD460 million. This is supported by the foreseen sustained inflow of foreign direct investments (FDIs) of USD8 billion in 2021, as well as government borrowings to fund the continuing fight against the pandemic and the economic recovery program alongside moderating investments by residents in foreign financial assets,” he added.
For 2022, Abenoja said the country would continue to post a surplus but projections would be lower.
“For 2022, the overall BOP position is projected to remain in surplus but at a more modest level of USD700 million (0.2 percent of GDP) from USD1.7 billion (0.4 percent of GDP) in the previous forecast,” he added.
Abenoja said the narrower BOP surplus next year is mainly driven by a higher current account deficit.
Foreign direct investment, on the other hand, is expected to be higher at USD8.5 billion, while foreign portfolio investments will remain at USD5.7 billion.
“For 2022, the continued growth in advanced economies bodes well for Philippine trade and investments. This could also lend support to robust BPO revenues and overseas Filipinos (OF) remittances as businesses are likely to outsource or hire more overseas workers to fill in their manpower needs. The wider global distribution and administration of vaccines coupled with anticipated improvements in immunity and available Covid-19 (coronavirus disease 2019) treatments by next year are also likely to help revitalize international travel and tourism-related services,” he added. (PNA)
