Balance of payments deficit seen to hit $3.4 b in 2014

MANILA, Philippines (Xinhua) - The Philippines' balance of payments (BOP) position for 2014 is seen ending in deficit this year from a previous forecast of a surplus, the country's central bank said today.

Bangko Sentral ng Pilipinas, or the central bank, said the BOP deficit will hit $3.4 billion by year-end, a reversal of projected $1.1 billion surplus announced in July. The country registered a $5.1 billion surplus last year.

"Specifically, the normalization of policy in the US has affected financial markets especially since there was a reallocation of assets affecting the Philippines and other emerging markets," central bank Governor Amando M. Tetangco, Jr. said.

The latest central bank data showed that the BOP position remained in a deficit of $3.43 billion as of September.

Tetangco, however, said the projected deficit will not adversely affect the country's gross international reserves, which is expected to settle at around $80 billion by year-end.

Despite a BOP deficit, the current account is expected to remain in surplus this year, an indication that the Philippine economy remains healthy.

Tetangco said the central bank even hiked its projection for the current account surplus to $6.6 billion by the end of the year from the previous forecast of $6 billion on a smaller trade deficit due to increasing imports.

The country's BOP position is expected to return to a surplus next year, which is forecast to be $1 billion.