Phl external position seen recovering in H2

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) expects the country’s external payment position to improve in the second half due to the sustained inflow of remittances from overseas Filipino workers as well as receipts from the business process outsourcing (BPO) and tourism sectors.

BSP Deputy Governor Diwa Guinigundo said the balance of payments (BOP) position is bound to recover in the second half after it exceeded the projected deficit for 2017 from January to June.

“We believe that the second half will show a stronger external payments position on account of the usual current account flows including overseas Filipino workers remittances, tourist receipts, and BPO revenues,” Guinigundo said.

The BSP earlier revised the BOP projection to a deficit of $500 million instead of a $1 billion surplus this year due to the reversal to a deficit of the current account and net outflow in the financial account.

Key considerations in the revised BOP projections include the upward revision in the global growth outlook by the International Monetary Fund as well as the less gradual pace in the policy rate tightening by the US Federal Reserve and the possible impact of the policies of US President Donald Trump.

However, the country’s BOP deficit amounted to $709 million in the first half, a complete reversal of the $634 million surplus recorded in the same period last year.

For June alone, the BOP shortfall reached $569 million from a surplus of $418 million in the same month last year.

The BOP shows a summary of a country’s transactions with the rest of the world. Components include trade, foreign direct and portfolio investments, and even remittances from Filipinos abroad.

A deficit means more money went out of the country while a surplus means otherwise.

Guinigundo said the country’s BOP position would improve via sustained foreign direct investment (FDI) inflows in the second half and eventually meet the projected deficit for 2017.

“So the $500 million expected shortfall is still doable. FDIs are also expected to come in stronger in the second half,” he said.