However, the Bangko Sentral ng Pilipinas (BSP) reported a 46.8-percent drop in the current account surplus which stood at $4.504 billion, following lower receipts from trade-in-goods despite the lower net outflows in the services account and the slight improvement in the income account surplus.
BSP Governor Rafael Buenaventura said this was better than the projected $1.1-billion BOP deficit. "In October, our worry was whether we can access the market at all following the September attack on the US," he said. "Then by November we were de-coupled from the rest of the region so we were able to reverse."
The BOP account represents the country’s total transactions with the rest of the world, both in goods and services and in capital flows. A negative BOP position translates into a drain on BSP’s dollar reserves, and a sustained deficit eventually leads to a weaker peso versus the dollar.
A better BOP position indicates higher dollar reserves critically needed in defending the local currency from attacks by currency speculators.
For the whole year of 2001, Buenaventura said exporters contracted by 16.2 percent due to the softening of demand from the country’s major trading partners, US and Japan.
Specifically, exports of electronics declined in both volume and price, thinning by 24.7 percent. Garment exports, on the other hand, dropped by 6.2 percent as the country’s export markets continued to phase out their import quota allocations to their suppliers.
According to the BSP, slight growths were noted in machinery and transport equipment which managed to grow by 3.8 percent due to strong sales of automotive accessories and parts.
Buenaventura also revealed that imports fell across the board by 6.2 percent in 2001. All major commodity groups dropped with imports of mineral fuels and lubricants posting the highest decline of 13 percent due to the decline in the average price of petroleum which negated the 4.3-percent increase in import volume.
On the other hand, the country’s income account remained in the black in 2001 at $3.252 billion. This was 1.1-percent higher than last year’s surplus following an increase in remittances from overseas Filipino workers which comprised nearly 85 percent of gross income receipts.
According to the BSP, OFW remittances rose from $6.05 billion to $6.235 billion in 2001. However, the increase merely reflected the expansion in the coverage of the BSP’s monitoring system which now includes foreign exchange corporations and thrift banks.
Without the expansion in coverage, the BSP said the receipts from OFWs actually dropped by 8.1 percent to only $5.56 billion. This reflected the decline in the number of deployed Filipinos working abroad from 4.8 million in 2000 to 4.7 million in 2001.
The BSP said the net outflow in trade-in-services also declined by 8.2 percent to $1.94 billion despite lower travel receipts as the country continued to suffer from perceived security problems in the South and the travel scare that followed the terrorist attacks on the US.
Buenaventura however noted that despite the heightened aversion of investors to risks in 2001, foreign direct investments into the country continued to flow in. Net inflows increased by 44.9 percent to $1.95 billion and the bulk of direct investments, which came from the US, Japan, France and Singapore, was directed to the manufacturing and telecommunications sector as well as financial institutions.