MANILA – The Bangko Sentral ng Pilipinas (BSP) projected that the country’s balance of payments (BOP) for 2023 and 2024 will post surpluses but will be narrower next year.
In a statement Friday, the central bank forecast that the country’s surplus as of the fourth quarter of 2023 is seen to reach USD1.1 billion before easing to USD400 million by the last quarter of 2024.
“[P]ositive reinforcements to the country’s external sector continue to include the rebound in the global tech cycle supporting the recovery of electronics exports, the international lifting of the state of health emergency which will support both travel and the hiring of Filipino workers overseas, with the latter benefitting as well from labor shortages in countries challenged by an aging population,” the BSP said.
On the other hand, the central bank also cited downside risks to the country’s external position. These include subdued global demand conditions, weak prospects on trade and investments, lingering high interest rate environment, elevated inflation, and the escalation of geopolitical tensions in various parts of the world.
The BSP also cited domestic factors that may pull down the surplus level, which include a weaker outturn of gross domestic product (GDP), and a higher and longer interest rate.
“For 2024, the overall BOP is projected to retain its surplus position, albeit lower than the earlier forecast. This reflects the estimated narrower current account gap for next year as well as the slightly lower than previously projected non-resident investment inflows,” the BSP added.
Factors that will support the BOP position next year include the higher growth forecast on tourism, stable expansion of revenues of business process outsourcing companies, and overseas Filipino workers’ remittances.
Likewise, the improvement in the net services and income accounts will offset the foreseen wider deficit in merchandise trade.
“Nonetheless, foreign investment prospects find some support from the government’s thrust to implement key amendatory laws that eased rules on foreign investor participation in key industries as well as its plan to keep infrastructure spending at above 5 percent of GDP,” the central bank said. (PNA)
