Metro Manila (CNN Philippines, June 16) — The balance of payments (BOP) deficit for this year won’t be as bad as earlier thought, according to the Bangko Sentral ng Pilipinas (BSP), indicating improving conditions.
The BSP on Friday said it now expects the BOP to end 2023 with a deficit of $1.2 billion, or 0.3% of gross domestic product (GDP) – narrower than the previous forecast of a $1.6 billion deficit equivalent to 0.4% of GDP.
\”The financial account is now projected to continue to post inflows. However, it is lower than the previous forecast,\” BSP Director of Economic Research department Hanesha Botocan said.
Botocan said this is underpinned mainly by the projected lower net inflows of foreign direct investments at $9 billion from the previous $11 billion, mainly due to dampened investor sentiment from external headwinds, in particular power politics through economic means.
The BSP, meanwhile, kept its BOP deficit projection for 2024 at $0.5 billion, accounting for 0.1% of GDP.
The BOP is the record of all international financial transactions made by residents and entities of a country, comprising of the current account, the capital account, and the financial account. The BOP measures if a country has a deficit or a surplus from its economy, which is a factor in formulating policies.
The central bank revised its projections for the current account – which monitors the inflow and outflow of goods and services into a country – to a deficit of $15.1 billion for 2023, or 3.4% of GDP. That’s narrower than the $17.1 billion the BSP previously announced.
The forecast was lowered as the trade gap will likely be thinner – with growth in both goods exports and imports moderate \”amid weak global activity and decline in commodity prices.\”
The BOP, however, will be supported by a sustained growth in travel and BPO receipts, remittances and net inflows in foreign direct investments.
