MANILA -- Higher importation as a result of increased domestic demand continues to cause deficits in the Philippines’ current account, which in the second quarter of 2018 stood at USD2.9 billion.
In a briefing Friday, Bangko Sentral ng Pilipinas (BSP) Department of Economic Statistic (DES) head Redentor Paolo M. Alegre, Jr. said the deficit in the current account for the period April to June this year is a turn-around from the USD157 million surplus same period in 2017.
He attributed the current account deficit in the second quarter to higher trade deficit amounting to USD12.9 billion from USD9.1 billion same period last year. The gap was caused by the double digit expansion of imports at 16 percent along with the 1.7 percent drop of exports.
Deficits in the current account has been traced as the reason for the decline of the country’s balance of payment (BOP) position.
In the second quarter this year, the BOP, which is the sum of a country’s transaction with the rest of the world, registered a higher deficit of USD 2 billion against the previous quarter’s USD1.2 billion.
In the second quarter of 2017, the country’s BOP position stood at USD289 million.
As a result the country’s gross international reserves (GIR) as of end-June 2018 amounted to USD77.5 billion, lower than the USD 81.3 billion in the first half of 2017.
Amid this drop, BSP Assistant Governor for Monetary Policy Sub-Sector Francisco Dakila said the country’s foreign exchange reserves remain adequate since it is enough to cover 7.1 months’ worth of imports of goods and payments of services and primary income. “The international norm is between three to four months. This is pretty much above the international norm,” he said during the same briefing.
Dakila said the country continues to have structural source of foreign exchange.
One of these sources is the money being sent home by Overseas Filipino Workers (OFWs). “In particular, for the fourth quarter of the year we have lots of inflows expected,” he said, referring to the seasonal large remittance inflows during the holidays. (PNA)
