The Bangko Sentral ng Pilipinas (BSP) reported yesterday that the country’s current account for the first three months of the year posted a surplus of $1.17 billion, equivalent to about 4.4 percent of gross domestic product (GDP).
BSP Deputy Governor Diwa Guinigundo said this was a 59-percent growth from the year-ago level of $733 million, due mostly to higher inflows from remittances, portfolio investments and the surge in the services exports.
Guinigundo said there was a deficit in the income and trade-in-goods accounts due to rising trade deficit caused by rising oil prices which overshadowed the growth in export income.
Total exports of goods for the first quarter, according to Guinigundo, grew by 14.2 percent to reach $10.69 billion due to higher shipments of electronics and garments.
According to the BSP’s Department of Economic Research, there was a pick-up in global demand for electronic products which caused a corresponding increase in the country’s electronic exports.
DER director Iluminada Sicat said export earnings also picked up due to the renewed growth in the garments industry which had achieved relative success despite the loss of quota allocations in their traditional export markets.
"The industry has shifted to high-end garments products and branded products," Sicat said. "So their earnings were higher in the first quarter compared to last year."
Significantly, however, Sicat said the services account during the quarter improved by 99 percent, narrowing down the deficit to only $4 million compared to $358 million over the same period last year.
"This was because of foreign inflows on travel, communication, computer and information and recreational services," she said. "But the darkhorse here has been the BPO sector which delivered the significant increase in export earnings."
On the other hand, the income account under the current account posted a higher deficit due to lower remittances from overseas Filipino workers.
Sicat said this resulted from the decline in the number of deployed workers that was traced to the tightening in immigration rules in Japan.
As a result, there as a decline in remittances from workers classified as domestic OFWs or workers that work abroad with contracts lasting less than a year, mostly entertainers and cultural workers.
The BSP reported that the capital and financial account during the first quarter remained in surplus at $1.45 billion but slightly lower compared with $1.56 billion last year.
Sicat said the decline was a result of the drop in other investment accounts which tempered the growth in direct and portfolio investments.
Under the "other investment" account, there was a net outflow resulting from repayment of the country’s loans.
"These were mostly loans being paid by domestic commercial banks," Sicat said.
The BSP is currently reviewing all its projections and targets in preparation for the annual performance review by the International Monetary Fund (IMF) which starts in July.