(CNN Philippines) — This year could be a good one for the Philippines’ export sector, according to balance of payment (BOP) projections by the Bangko Sentral ng Pilipinas (BSP).
A country’s BOP comprises all the transactions of its residents with the rest of the world, within a specific period. In 2014, the country registered a BOP deficit of about $2.9 billion. This essentially means that the country’s imports outnumbered its exports.
However, the BSP expects 2015’s BOP position to reverse from 2014 and reach a surplus of $2.0 billion, subsequently signifying the excess of exports over imports.
The BSP credits this outlook to “a sustained strong current account surplus following the downward revision in international oil prices.” Because of the fall in oil prices, the bank expects 2015’s year-end gross international reserves (GIR) to each approximately $81.6 billion, up from $79.5 billion in 2014.
“At this level, the GIR remains ample, covering 10 months’ worth of import goods and payments of services and income,” the BSP said.
Likewise, the bank predicts that the country’s current account, which has been in surplus since 2003, could reach a surplus of $14.2 billion. That figure is equivalent to $.4% of the country’s gross domestic product.
“The current account is expected to be supported by strong overseas Filipino remittances and robust receipts from business process outsourcing (BPO) and tourism,” the bank said.
“A narrowing merchandise trade deficit is also expected to prop up the current account.”
Electronics are expected to buoy the rise of exports by 5%. On the other hand, domestic activity may bolster imports by 1%.
A lower outflow of $8.4 billion, compared to 2014’s $10.1 billion, is also expected from the balance of the financial account. Despite the volatility of the global financial environment, the bank said that positive business confidence can support higher foreign direct investments (FDI). The bank expects FDI to swing to $0.2 billion inflows, compared to 2014’s $1.4 billion outflows.
“Overall, the external position go the Philippines is seen to improve in 2015…[T]he country’s external position remains a key source of resilience and policy flexibility that would enable the economy to ride out the volatilities of global economic and financial developments.”
